CF Industries has, for a second time, redrawn the terms of its bid for Terra Industries, adding more than $400m in shares and including investors in its target in a proposed $1bn cash return.

CF raised to 0.465, from a previous applicable figure of 0.4129, the number of its own shares it will pay for each Terra share.

The sweetened bid valued Terra's shares at about $37.50 apiece on Wednesday, equivalent to a stock market value more than $3.8bn.

In addition, CF said the merged group would return $1bn either through share buybacks or a self-tender operation, adding that it would welcome having "a number" of Terra directors, including chief executive Mike Bennett, on the board.

Shareholder conversations

CF Industries, whose approaches have thus far been rejected by Mr Bennett, said its revised offer followed "regular contact" with Terra investors.

"Based on these conversations, [CF] believes that the enhanced exchange ratio, the preservation of an all-stock transaction and the addition of a cash component would be compelling to Terra stockholders," CF said.

Terra - whose shares closed up 5.5% at $30.44 in New York, well below the implied value of CF's offer - said it would consider the revised bid at a board meeting to be held before the end of the month.

CF stock ended 3.4% higher at $82.74.

Investor perk

CF also proposed the distribution of 5m so-called contingent future shares to existing shareholders, which would convert into ordinary stock assuming certain conditions were met.

The main one is that the share price of the merged group would need to beat $115 for five trading days within any 20 days.

This issue reflected the "significant increase in our offer, as well as in the future trading value of the stock", Stephen Wilson, the CF chief executive, said.

The statement came shortly before Canada's Agrium, which is bidding for CF, said it would continue pressing Mr Wilson for talks.

"Agrium has had extensive discussions with CF shareholders, who have advised Agrium that they favour a combination between Agrium and CF and want the CF board to engage in discussions with us," Agrium added.