By Matt Daily and Ernest Scheyder
NEW YORK (Reuters) - Fertilizer maker CF Industries Holdings Inc
Breaking its weeks-long silence, CF strongly criticized Terra's planned tie-up with Norway-based Yara, which was announced about a month after CF called off its year-long effort to buy Terra in January.
"We do not understand how Terra could have entered into an agreement with Yara without giving CF Industries an opportunity to bid on a level playing field," CF Chief Executive Stephen Wilson wrote to Terra CEO Michael Bennett.
Prices for fertilizer and other agricultural commodities slipped during the recession, but are beginning to rebound as farmers plant more crops and the world population continues to grow. That's put more pressure on the fertilizer industry to become more efficient, including gobbling each other up.
CF, which is currently fighting off a hostile takeover attempt from Agrium Inc
Yara has offered $41.10 per share, all in cash.
In morning trading, Terra shares rose $5.25, or 12.7 percent, to $46.45, while CF shares fell $5.90, or 5.5 percent, to $101.64.
Even if CF's shares go down from $107 to $95 the bid value will only decrease by about $1 and CF's offer will still be more attractive than the Yara bid, noted Broadpoint AmTech analyst Edlain Rodriguez.
"The way the deal is structured, the volatility in CF's shares will not have a lot of impact on the bid," he told Reuters.
Last month, Terra agreed to be bought by Yara for $4.1 billion in an all-cash deal that valued the company at $41.10 per share.
All eyes are on Yara now, with many on Wall Street wondering if the company will increase its own bid.
"Yara always said they didn't want to get into a bidding war, and this is clearly going to be a bidding war," Rodriguez said.
Terra was not immediately available to comment, and Yara declined to comment.
CF has secured $4.05 billion in financing commitments for the deal, including $2.8 billion from Morgan Stanley Senior Funding Inc. and $1.25 billion from The Bank of Tokyo-Mitsubishi UFJ Ltd.
(Reporting by Matt Daily, Ernest Scheyder and Euan Rocha; Editing by Derek Caney, Dave Zimmerman)
