Fertilizer producer Terra Industries Inc
Yara, which bid $4.1 billion for Terra, has five business days to either match or exceed CF's bid, Terra said on Wednesday. Yara said it will have no further comment on the deal until its board has met.
This latest move may prompt an end to the nearly year-long buyout saga between CF and Terra, though the so-called fertilizer wars have seen many twists that have surprised Wall Street.
Yara has said Terra's assets would help it become a global leader in the fertilizer industry, but has so far stayed mum on whether it will raise its bid.
Though last year, before Yara launched its bid, Yara spokesman Asle Skredderberget said the company had stayed away from bidding for Terra because we had no interest in being in a bidding war in the U.S.
If they up the bid, this is definitely where it's going, Broadpoint AmTech analyst Edlain Rodriguez said of a bidding war. Now the ball is in Yara's court.
Arbitrage dealers noted that even if the Norwegian company did raise its bid, it would not necessarily have to top the nearly $47-per-share value of CF's bid, because Yara's offer would likely be all cash.
If the deal falls apart, Norway-based Yara will get a $123 million breakup fee.
Regardless of Terra's fate, Canada's Agrium Inc
Agrium has said its offer is contingent on CF not acquiring Terra.
BY THE DETAILS
Prices for fertilizer and other agricultural commodities slipped during the recession, but rebounding as farmers plant more crops and the world population grows. That's put more pressure on fertilizer companies to improve efficiencies through consolidation.
CF took its offer for Terra hostile last week. The company had been trying for more than a year to buy Terra, but then backed away earlier this year.
That prompted Yara to make its offer. CF swooped back in last month with a sweetened deal.
CF has offered $37.15 cash and 0.0953 of a share for every Terra share, totaling nearly $47 a share. Yara had bid $41.10 per share in cash.
CF has said that Terra is worth $5 a share more to it than Terra, because it believes it can pull in $75 million more in cost savings than the Norwegian company.
Shares of Terra rose 76 cents to $46.59 in morning trading, while CF fell 39 cents to $100.24.
CF's bid has already been cleared by regulatory authorities, and the company believes it can close a deal in less than 30 days.
(Reporting by Ernest Scheyder and Michael Erman in New York, and Richard Solem in Oslo; Editing by Lisa Von Ahn and Derek Caney)