Fertiliser maker CF Industries Holdings Inc formally launched its hostile bid to buy rival Terra Industries Inc on Monday, and said it was still interested in holding talks with Terra to seal a deal.

CF said it had commenced with an exchange offer of 0.4235 of its share for each Terra share by filing with the US Securities and Exchange Commission. At current share prices, that offer is worth about $2.37 billion.

Deerfield-based CF first disclosed its interest in Terra in mid-January, when it unveiled its proposal to Terra directors, in which Terra holders would swap each of their shares for 0.4235 CF shares. Terra's board subsequently rebuffed the bid, saying it "substantially undervalues" the Sioux City, Iowa company.

CF then vowed in early February to bypass the board by carrying its offer directly to shareholders.

On Monday, it acted on that threat. In a letter to Terra's board dated today, CF President and CEO Stephen R Wilson said CF "has not seen any reason to consider changing the terms of our proposal," but remains prepared to "review any information you can provide us that you believe justifies a change in terms," and added that the unwanted suitor is "prepared to keep an open mind" with regard to a sweetened bid.

CF said it was confident a tie-up of the two companies would benefit shareholders and yield $100 million in operating synergies, but that it did not plan to raise its offer. It said it would welcome Michael Bennett, Terra's CEO, as a director and senior executive of the combined company if the transaction is completed. In the meantime, CF Industries said it is proceeding with plans to replace three members of Terra's board at Terra's annual meeting, scheduled for 15 May.

At the conclusion of the letter to Terra, Wilson acknowledges that the tender offer is ultimately subject to a negotiation agreement with Terra's board, "since as you are aware, under Maryland law we cannot close a transaction without the approval of your board."

The offer is slated to expire on 15 May.

Terra declined $1.33, or 5.4 per cent, to $23.35 at 2:15 p.m. in New York Stock Exchange composite trading. The shares have gained 48 per cent this year through 20 February. CF Industries fell $4.20, or 7.5 per cent, to $51.52 in New York. The shares rose 13 per cent this year through 20 February.