CF Industries has dismissed as "grossly inadequate" a sweetened $3.6bn offer from Agrium, its Canadian competitor.

The Illinois-based fertilizer giant said that Agrium's revised bid, which added $3.3 in cash to its offer price for each CF share, also "substantially undervalues" the group and was "not in the best interests" of shareholders.

They would be better served by the CF's own bid, for rival US fertilizer group Terra Industries, Stephen Wilson, the CF chief executive, said.

"We strongly believe that continuing to pursue our long-term strategy, including our proposed business combination with Terra Industries, is the best way to do so," he said in a statement.

This tie-up, which CF first outlined in January, would create the world's largest producer of nitrogen fertilizer. Terra has rejected the offer, despite CF improving the terms on March 23.

CF would have to drop its Terra bid as a condition of accepting Agrium's offer.

Agrium's New York listed stock stood $3.56, or 9.3%, lower at $34.78 in afternoon trade, in a falling market, valuing its cash-and-shares bid for CF at roughly $69.78 a share.

CF shares stood  $3.34, or 4.6%, lower at $69.96.