The three-way takeover tangle in North America's fertilizer industry may be about to get more knotted, after takeover target Terra Industries announced that it may turn predator.

The Iowa-based nitrogen group said it was "exploring potential transactions" which would "enhance value for shareholders".

Terra's $1bn cash pile enabled it "to pursue opportunities to acquire assets that complement our business and fit our market direction and long-term industry trends", chief executive Michael Bennett said.

The comments came in a letter to shareholders ahead of the group's annual meeting on November 20 at which CF Industries, the Illinois-based fertilizer group which is stalking Terra, is attempting to get three nominees voted on to Mr Bennett's board.

Meanwhile, CF has itself been targeted for takeover by Canada's Agrium.

Pure play 

Mr Bennett restated in his letter Terra's opposition to CF's advances, branding a $3.8bn bid as "opportunistic" and too low.

A merger with CF, which had made "aggressive" claims about the cost savings which could be unlocked from a deal, would reverse a Terra strategy of steering clear of the competitive US Gulf Coast area for production, and of sticking to nitrogen fertilizers.

"Terra has... sought to avoid confusing its business model with minor operating positions in or reselling other nutrients," the letter said.

'Improving fundamentals'

He added that the nitrogen market was poised for a strong autumn after, like other fertilizer types, suffering a weak 2008-09 season.

"The weakness in nitrogen markets in the first half of 2009 has levelled off as the general economy has stabilised," he told investors.

"Improving fundamentals are expected for our business for the remainder of the year. "

Nitrogen prices were set to revive during the autumn as customers, who ran down stocks during the spring, "seek to refill depleted inventories".

Terra shares stood $0.25 higher at $33.20 in early deals in New York.

CF stock was $1.26 higher at $87.19, after hitting, at $87.49, its highest level since October.