This action by AGR is very clearly an attempt to prevent the possible Terra Industries (TRA) - CF combination which would threaten AGR's top position in most major fertilizer segments. From that standpoint, AGR's offer make perfectly good sense as any situation that disrupts TRA/CF would benefit AGR in the long run.
As of this entry, CF has not responded to the unsolicited offer. Suffice it to say that a CF-AGR combination poses some troubling antitrust issues, as these are currently the top two players in multiple fertilizer product niches. Any formal agreement between these companies would very likely require divestitures in order to maintain competition for various fertilizer products.
That being said, this is somewhat reminiscent of last year's AW-RSG transaction where Waste Management (WMI) attempted, and failed, to prevent the merger of its two closest competitors. Naturally, that situation involved a friendly, formal agreement between AW and RSG which is absent in this situation. However, Agrium's offer for CF should at least now compel TRA to seriously consider the consequences of continuing to reject the CF offer. If AGR and CF do eventually combine, TRA would be permanently relegated to a distant second-tier position within the fertilizer industry. This fact alone may be the catalyst to reversing TRA's current position with respect to CF.