Terra Industries has snubbed CF Industries' latest sweetened bid as too low, citing investors' growing hopes for fertilizer groups.

The rejection was supported by all directors, including the three CF nominees voted in by Terra investors, raising doubts as to how big a strategic victory CF scored in getting its candidates onto the board.

A CF spokesperson declined to comment to Agrimoney.com on Terra's decision.

'Brighter prospects'

Terra, a nitrogen specialist, said CF's fifth offer continued to "substantially undervalue" the group, despite being $475m higher than the previous bid.

The latest proposal, pitched at $29.25 in cash plus 0.1034 CF shares per Terra share, did "not fully reflect" improved sentiment stemming from a revival in the fortunes of the group's agricultural clients, at a time of weak prices for natural gas, a major cost for nitrogen groups.

"The market consensus is shifting to reflect the brighter near-and long-term prospects for the entire sector," Terra said.

"The fertilizer sector has strengthened significantly in recent months."

Share price rises

Share prices of global fertilizer groups overall had increased 26% since the start of November, against a 7% rise in S&P 500 stock index.

Shares in the pure-play nitrogen segment had done even better, jumping 34%.

Terra added that its board would "consider any bona fide opportunity that creates meaningful value for all Terra shareholders".

'Worlds apart'

Indeed, analysts at Sterne Agee said the chances of a deal were more than 50% despite Monday's rejection,