Feb. 25 (Bloomberg) -- Agrium Inc., the largest U.S. supplier of seeds, fertilizer and pesticides, made an unsolicited $3.6 billion bid for CF Industries Holdings Inc. to triple capacity for making phosphate and nitrogen crop nutrients.

The $72-a-share proposal, 30 percent more than CF’s closing price yesterday, seeks to derail CF’s $2.67 billion plan to acquire rival Terra Industries Inc. Agrium said in a statement it tried to buy CF in 2005 and has watched the company since then.

Agrium Chief Executive Officer Mike Wilson has been expanding in the U.S., Europe and the Middle East as higher crop prices boost demand for fertilizer. Last year, he bought UAP Holding Corp. for $2.6 billion to add stores and products. In addition to boosting Agrium’s capacity to produce crop nutrients, the combination would save $150 million in costs a year, Wilson said today.

“This would give Agrium not only a greater position in fertilizer, but an even more dominant presence” in U.S. farm- products distribution, Richard Kelertas, an analyst at Dundee Corp. in Montreal, said today in an interview.

Deerfield, Illinois-based CF surged $6.19, or 11 percent, to $61.77 at 4:15 p.m. in New York Stock Exchange composite trading. Calgary-based Agrium fell C$4.29, or 8.5 percent, to C$46.03 in Toronto Stock Exchange trading. The shares have risen 11 percent this year. Terra declined 97 cents, or 3.9 percent, to $23.85 in New York.

Terra Bid

Agrium’s proposal comes two days after CF took its all-stock takeover offer directly to Sioux City, Iowa-based Terra’s shareholders. That proposal values Terra at about $2.67 billion based on today’s closing prices. Terra’s board rejected the offer last month, saying it “substantially undervalues” the company.

Under the proposal announced today, CF investors would receive one Agrium share and $31.70 in cash for each share they hold.

CF said in a statement it would evaluate Agrium’s proposal in the context of its bid for Terra.

Ben Johnson, an analyst with Morningstar Inc. in Chicago, said Agrium’s proposal probably makes more sense to CF’s investors than CF’s bid for Terra.

“CF shareholders get access to Agrium’s much more stable farm-retail business and its more compelling investments in mineral fertilizers such as potash and phosphates,” Johnson said today in an interview.

Agrium has completed nine acquisitions since 2005 to help reduce the company’s reliance on earnings from wholesale production of potash, phosphates and nitrogen-based crop nutrients.

Strategy ‘Not Changed’

“Our strategy has been to invest across that ag-input value chain,” Wilson said today on a conference call with analysts and investors. “The strategy has not changed.”

Wilson said he doesn’t expect antitrust regulators to oppose the takeover.

Agrium would benefit from owning CF’s nitrogen-fertilizer plants in Donaldsonville, Louisiana, and Medicine Hat, Alberta, and phosphate mining and fertilizer-making assets in Florida, Morningstar’s Johnson said.

The takeover may disrupt Agrium’s “nice mix” of getting half of its revenue from retail sales and half from wholesaling, said John Stephenson, who helps oversee about $1.03 billion at First Asset Investment Management Inc. in Toronto.

“Now they’re clearly going more wholesale,” Stephenson said today in an interview. “On first blush, that’s negative.”

Sufficient Cash

Agrium said the deal is not conditional on financing because the company has sufficient cash as well as commitments from Royal Bank of Canada and the Bank of Nova Scotia for about $1.4 billion.

RBC Capital Markets and Scotia Capital are acting as financial advisers to Agrium, and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Blake, Cassels & Graydon LLP are providing legal advice.

Morgan Stanley and Rothschild are CF’s financial advisers. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel, CF said.

Potash Corp. of Saskatchewan Inc. and Mosaic Co. are the two largest North American fertilizer producers by market value.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.

Last Updated: February 25, 2009 16:56 EST