DOW JONES NEWSWIRES

CF Industries Inc. (CF) again recommended that shareholders reject an increased hostile bid from rival fertilizer maker Agrium Inc. (AGU) late Sunday, again saying the deal was "grossly inadequate."

Agrium had boosted the cash portion of its offer by 10% Friday as it looked to build shareholder backing for the takeover.

CF Industries had already rejected an earlier offer from the company last week. Agrium said Sunday it could raise its bid further.

Agrium, which launched an exchange offer to CF shareholders two weeks ago, has also said it will wage a proxy effort ahead of CF's annual meeting next month. The moves are the latest in a three-way battle involving Agrium, CF and Terra Industries Inc. (TRA) to increase their market share.

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 said Friday it was boosting the cash portion of its CF offer to $35 a share 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 Agrium's initial bid of $72, or $3.6 billion in total. CF closed Friday at $73.30 and hasn't traded premarket.

In a presentation accompanying Agrium's conference call Friday, Agrium urged CF shareholders to withhold their votes for the election of directors at CF's annual meeting and tender their shares to Agrium's exchange offer "to send a clear message to the CF board."

Last week, CF said Agrium could afford to pay $100 a share, but during the call, Mike Wilson, president and chief executive of Agrium, said there's no "unbiased observer" that would deem $100 a share for CF "credible," and Agrium won't go that high.

CF said Sunday that it was confident its shareholders and Terra's will support a proposed combination between those two companies instead. Terra has rejected a hostile offer from CF, which has inturn launched a proxy contest to replace three Terra directors at its annual meeting in May.

Wilson had said CF sharehlders were telling Agrium that they prefer to receive a premium for their shares to the "dilution and uncertainty" a combination with Terra would bring, and that they believe Agrium has a good track record of making acquisitions work.

Agrium's shares closed Friday at $38.34 and Terra's closed at $29.14. Neither has traded premarket.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com