Terra Industries has given Norway's Yara International a week to sweeten its $4.1bn offer, or lose the US fertilizer group to a rival bid from CF Industries.

Terra, which last month agreed a takeover by Yara, said it planned to switch its acceptance to CF's "superior" cash-and shares bid, valued at $4.7bn.

To regain Terra's fancy would mean Yara making terms "at least as favourable" as those proposed by CF before 17:00 New York time on March 17.

Yara, which will be entitled to a $123m break fee if Terra switches bids, said it had "no further comments" until its board had considered their next move.

'Substantial risks'

CF's chairman and chief executive, Stephen Wilson, signalled that Yara needed to do more than matching his offer on monetary terms to regain the initiative.

"Any offer from Yara must be heavily discounted for the substantial risks and length of time associated with closing," he said.

Yara's deal requires approval from the Norwegian state, the nitrogen giant's biggest shareholder.

Mr Wilson added that Terra was worth more to CF than "any other acquirer, given the strategic benefits of the transaction, including synergies, which only CF Industries can achieve".

CF has proposed deal benefits, from measures such as cutting out duplicated overheads, of up to $135m a year from the deal, compared with $60m from Yara in "hard" synergies.

In New York, CF shares closed up 2.9% at $103.55, with Terra ending 2.4% higer at $46.95.

Yara shares closed 2.3% higher at NOK241.90 in Oslo.