(Updates with CF response, conference call details and share prices)

 
   DOW JONES NEWSWIRES

Agrium Inc. (AGU) boosted the cash portion of its hostile bid for rival fertilizer maker CF Industries Inc. (TRA) 10% as the company looks to build shareholder backing for the takeover effort.

CF said it's board would "evaluate" the new approach.

Agrium, which launched an exchange offer to CF shareholders last week, also announced it will wage a proxy effort ahead of CF's annual meeting next month.

The Candian company will recommend shareholders withhold votes for CF's board nominees. The company has scheduled an investor call for 11.00 a.m. EDT (1500 GMT).

The moves are the latest in a three-way battle involving Agrium, CF and Terra Industries Inc. (TRA).

Terra has rejected a hostile offer from CF, which has in turn launched a proxy contest to replace three Terra directors at its annual meeting in May.

Agrium said Friday it was boosting the cash portion of its CF offer to $35 from $31.70. The stock portion of one share of Agrium for one share of CF remains the same.

The latest offer values CF at $74.90 a share, 5.5% higher than Terra's initial bid of $72, or $3.6 billion in total. CF closed Thursday at $74 as investors have been ancitipating a higher offer from Agrium.

"CF Industries' board of directors will evaluate the revised proposal in the context of CF Industries' strategic plans to create shareholder value, including its proposed business combination with Terra Industries Inc," said Chuck Nekvasil, director of public and investor relations in a emailed rsponse.

Agrium's president and Chief Executive Mike Wilson said its improved offer shows the company's committment to closing the deal. He also reiterated the offer is a much better alternative for CF shareholders than their company acquiring Terra, which has repeatedly rejected CF's approaches.

CF has so far rejected Agrium's advances, and Wilson said Friday "we don't understand why CF would summarily reject our offer without any attempt to negotiate a mutually beneficial transaction."

The struggle comes as fertilizer producers look to take advantage of the drop in sector stock prices since last summer to buy up production capacity ahead of an expected rebound in prices.

Agrium's exchange offer for CF is slated to expire at 12 a.m. EDT (0400 GMT) on May 19.

CF shares were flat at $73.76, with Agrium 2.5% lower at 38.91 and Terra down 4% at $28.87.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; mike.barris@dowjones.com (Doug Cameron contributed to this article)