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One of Western Canada's most ambitious companies took its battle for global farm dominance to a new U.S. target yesterday as Calgary's Agrium Inc. launched a hostile bid for CF Industries Holdings Inc., a leading North American maker of fertilizer ingredients.

The $3.6-billion (U.S.) unsolicited offer marks Agrium's ninth – and biggest – acquisition bid in the past five years as it moves to corner an even bigger share of the agricultural supply market.

If it succeeds with the offer of $72 (U.S.) a share – 56 per cent in equity, the remaining $31.70 a share in cash – Agrium would become the fourth-largest public provider of crop inputs.

Those inputs include the wide array of products already in Agrium's stable, such as nutrients, seeds, fertilizers, herbicides and fungicides.

Swallowing CF would make Agrium a global leader in one key nutrient – nitrogen – and establish it as a major player in making and selling phosphate. Both are key components in fertilizer, and CF's central U.S. asset base “just fits like a glove” with Agrium's own strengths in the Prairies and the U.S. West Coast, Agrium president and chief executive Mike Wilson said yesterday.

Agrium's move comes at a time when most miners – in this case potash – are scaling back investment.

Statistics Canada reported yesterday that capital investment by miners and oil and gas producers is likely to plunge by 26.4 per cent in 2009, leading a 6.6-per-cent decline in capital expenditures by business and government.

Agrium's purchase of UAP Holding Corp. for $2.65-billion last year already made it the biggest farm retailer in the United States. But with the drop in global commodities, the company is now pursuing assets that will boost its own commodity production.

“I've been in commodities my whole career and this is the time to look at commodities,” said Mr. Wilson, who has overseen Agrium's rocket ride from a relatively small producer to a global agriculture player.

In recent years, it has picked up assets in South America, China, Europe and the Middle East. Five years ago, Agrium employed about 2,000 and had $2.6-billion in sales. Last year, it did $10-billion in sales and now employs about 10,000.

In that time, annual retail sales have grown to $560-million from $80-million, and Mr. Wilson hopes to nearly double that over the next five years.

Adding CF will push Agrium's revenue to nearly $14-billion. Flush from last year's boom in commodity prices (which briefly made competitor Potash Corp. the biggest company in Canada), Agrium says it can complete the acquisition without seeking additional financing.

Agrium has already failed once in its attempts to buy CF, when the Deerfield, Ill.-based company chose to go public rather than sell itself to Agrium. This time, Agrium's attempt is complicated by CF's own ambitions. On Monday, CF announced a $2.1-billion hostile bid to buy Terra Industries Holdings Inc. Agrium's offer, which it hopes to close in 90 days, is contingent on CF pulling out of that bid, and some investors expect CF to try to fend off Agrium by increasing its bid for Terra.

In a statement yesterday, CF said its board “will evaluate the proposal carefully in the context of CF Industries' strategic plans.”

Either way, Agrium will likely be pressed into boosting its offer, said Dundee Securities analyst Richard Kelertas – especially since CF's share price has been depressed by its bid for Terra.

“CF would be totally out of their mind if they said, ‘Okay, great, let's take it,'” Mr. Kelertas said.

Agrium said its bid represents a 42-per-cent premium over CF's 30-day trading average.

Other players may also enter the fray. Norwegian producer Yara International ASA is rumoured to be interested in buying CF if it acquires Terra. Yara could make an offer for both, or go after only Terra and leave CF for Agrium.

“Yara could actually come in and help Agrium,” Mr. Kelertas said.

This is not Agrium's first hostile takeover attempt. In 2005, it succeeded in an unsolicited bid for agricultural retailer Royster-Clark Ltd. Mr. Wilson objected to calling the Royster-Clark deal a “test case,” but said Agrium's success there – it managed to squeeze out 50 per cent more synergy savings than expected – was a key confidence builder.

Agrium had already done a number of smaller deals, but Royster-Clark was its first big acquisition foray, and “it showed we could do the major [deals]. And UAP is showing the same thing,” Mr. Wilson said.

Agrium believes it can achieve $150-million in synergies with CF, but Mr. Wilson is already looking to his next target as he seeks to make his company into a North American behemoth, dominating the business of producing and selling the fertilizer that farmers need to produce better crops.

The goal is to create a company that has wide geographical diversity and that sells to farmers who produce a wide variety of crops, insulating the company from ups and downs in certain commodities.

Add to that the need to feed an ever-hungrier world – as Mr. Wilson puts it, “demand for cars or colour TVs or oil and gas or nickel and zinc may decrease, but the demand for grain on a global basis has not” – and he sees a sunny outlook for Agrium.

“We've got lots of room to grow,” he said.