North America's three-way fertilizer bidding chain has taken another twist, with Agrium believing it has overcome a hurdle to its offer for CF Industries by teaming up with Terra Industries - the group that CF is bidding for.

Canada's Agrium has agreed to sell half of one of its fertilizer plants to Terra for $250m. Agrium has also signed to buy 175,000 tonnes of nitrogen from its US rival.

The stake sale "will address regulatory concerns" among Canadian authorities over the market position in nitrogen that Agrium would gain by buying CF.

"These actions will enable us to keep moving forward with the acquisition of CF Industries," Mike Wilson, the Agrium chief executive, said.

Agrium expects to refile a regulatory notice "shortly".

Meagre support 

However, the deals are conditional on Agrium winning its bid, which, as of Friday, was supported by holders of 9.1m CF shares, equivalent to 18.8% of the Illinois group's stock market value.

CF's chief executive, Stephen Wilson, has rejected Agrium's interest as "grossly inadequate" and "opportunistic", adding that it represents a "transparent" attempt to interfere with his bid for Terra.

CF is hoping next month to bring his own bid battle to a head next month by trying to vote in directors to the Terra board.

'Prime location'

Michael Bennett, the Terra chief executive, said he "welcomed" the chance to buy into a "quality" fertilizer asset, which had historically managed low prices for, natural gas, a key input for nitrogen plants.

The facility, the Carseland plant in Alberta, Canada, has a "prime inland location", Mr Bennett added.

The group's half share would have given it about $125m in revenues in the year to the end of June and operating income of $33m.

Agrium added that Terra was paying a similar multiple for Carseland as it was offering for CF.

Agrium shares stood 5.5% higher at Can$58.40 in lunchtime trade in Toronto. In New York, CF stock was up 3.9% at $98.17, with Terra 0.91% lower at $36.03.