Just when I thought I had the outcome pegged, the epic three-way takeover battle between Agrium (NYSE:AGU), Terra Industries (NYSE:TRA), and CF Industries (NYSE:CF) has taken another unexpected turn.

In what must be a near-record number of successive bids, CF's pursuit of nitrogen player Terra had stretched on for an entire year. The company did everything imaginable, from launching a proxy contest to buying Terra shares in the open market. CF finally made what looked like a realistic bid in November, and when Terra shareholders voted for some CF nominees later than month, this looked like a deal on the verge of getting sealed.

Well, no dice. Late last week, CF walked. The company, citing the increasingly prohibitive costs of a higher, definitive merger offer, sold all of its Terra shares and went home. At least the firm made a little money to compensate for the huge distraction.

Agrium, meanwhile couldn't be more pleased with the development, since it's been chasing CF since last February. The company has definitely been persistent, having continually pushed back the expiration of its tender offer since June. That persistence may finally pay off, but the question is whether Agrium is willing to pay up.

The Calgary-based firm's current offer stands at one share of Agrium, plus $45, for each share of CF. That puts the offer above the $100-per-share hurdle that I suggested as the likely minimum acceptable bid back in June. Of course, broad market valuations have pushed considerably higher since then, and fundamentals have firmed up for both CF's nitrogen and phosphate businesses. Mosaic (NYSE:MOS) recently attested to the strength of the latter market, pointing to 90% higher sales volumes in its latest quarter. Vale's (NYSE:VALE) negotiations to acquire Bunge's (NYSE:BG) Brazilian assets also underline the attractiveness of these two fertilizer products.

Given current conditions, I believe Agrium would have to offer at least $120 in combined cash and stock to close this deal. At that price, though, it gets harder to justify the combination as a compelling one.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.