* Cash and stock offer valued CF at $5.4 bln
* Agrium unveiled offer in February 2009
* Agrium to focus on other growth opportunities
* CF closes in on deal to buy Terra Industries (Adds details, background; Amounts in U.S. dollars unless noted)
By Euan Rocha and Cameron French
TORONTO, March 11 (Reuters) - Canadian fertilizer maker Agrium Inc (AGU.TO) is abandoning its $5.4 billion bid for U.S. rival CF Industries (CF.N), ending a drawn out takeover battle and bringing CF one step closer to closing a deal with Terra Industries TRA.N.
The three companies have been locked in a three-way merger battle for over a year, keeping investors glued to the usually staid fertilizer sector at a time when the industry was battling a sharp decline in fertilizer demand and prices.
Calgary, Alberta-based Agrium said in a statement it will allow its offer -- of $45 in cash plus one Agrium share for each CF share -- to expire on March 22.
"It is unfortunate we could not conclude this transaction, given the strong support shown by both CF and Agrium shareholders," said Agrium's Chief Executive Mike Wilson.
Agrium said it plans to now focus on growth opportunities available across the agricultural value chain. The company is the largest North American agricultural products retailer and it has been consistently expanding its retail footprint through M&A.
In January, CF withdrew its hostile bid for Terra, but it revived the bid earlier this month after Terra agreed to be acquired by Norwegian fertilizer maker Yara (YAR.OL).
Terra said on Wednesday it plans to accept CF's sweetened $4.68 billion takeover bid, unless Yara raises its current offer.
Yara, which bid $4.1 billion for Terra, has five business days to either match or exceed CF's bid.
Agrium launched its initial $3.6 billion bid for its CF in February 2009, and has since repeatedly sweetened its offer.
CF Industries has continually resisted the offer, arguing that it substantially undervalued the company.
Prices for fertilizer and other agricultural commodities slipped during the recession, but are beginning to rebound as farmers plant more crops and the world population continues to grow.
CF's bid for Terra has already been cleared by regulatory authorities, and the company believes it can close a deal in less than 30 days.
CF's offer for Terra would dilute the stake of current CF shareholders, while creating one of the continent's largest producers of nitrogen-based fertilizers such as ammonia, urea and UAN.
CF's current offer consists of $37.15 in cash and 0.0953 CF shares for each Terra share, or about $46.74, based on Thursday's closing prices.
Agrium's shares, which have been weighed down by fears that it would overbid for Terra, rose 4.8 percent to $70 in trade after the closing bell on Thursday. Its shares were also gained, after Canadian rival Potash Corp (POT.TO) raised its first-quarter earnings forecast. [ID:nN11254666]
CF's shares fell 4.6 percent in post-market trade to $96, after having closed at $100.61. Terra's shares, which closed at $46.90, held their ground as investors bet that Yara would come in with a sweetened offer. (Editing by Richard Chang and Lincoln Feast)