Norway's Yara International said on Friday it would not raise its offer for Terra Industries to match or exceed a rival bid from CF Industries Holdings Inc .

Yara agreed last month to buy Terra for $4.1 billion to create the world's biggest mineral fertilizer producer and boost its U.S. presence, as rivals look to join forces to gain size and reach.

Terra would be a perfect fit to Yara and attractive at our proposed valuation, but we will not increase our offer that was first accepted by the Terra Board, Chief Executive Joergen Ole Haslestad said in a statement.

Terra Industries said on Wednesday it plans to accept a superior $4.68 billion takeover bid from rival CF Industries unless Yara boosts its competing offer.

Analysts had expected Yara to give up on Terra after CF's bid.

The U.S. remains an attractive market for us and we will continue to search for opportunities to grow our business in the region, Haslestad said. We remain the global leader in the fertilizer industry, and there will be more opportunities around the world to grow our business further.

Yara will be entitled to a $123 million break-up fee if Terra chooses to terminate the merger agreement, including if it has received a superior proposal, Yara said.

We have said earlier that we do not want to participate in a bidding war, Yara spokesman Asle Skredderberget said. We want to grow in a way that creates value for our shareholders.

Trade in Yara shares restarts at 0800 GMT.

Analyst Hans-Erik Jacobsen at First Securities said shares were expected to rise.

The fear of an increased bid had put pressure on the shares, Jacobsen said. There are plenty of other opportunities for Yara. This industry needs consolidation.

Canadian fertilizer maker Agrium Inc had said on Thursday it was abandoning its $5.4 billion bid for U.S. rival CF Industries, ending a drawn out takeover battle and bringing CF one step closer to closing a deal with Terra.

These and other M&A battles have kept the fertilizer sector in investors' sights, despite a sharp fall in prices last year as the global economic crisis hit.

Analysts and producers expect a rebound in demand this year as farmers replenish their soil nutrient levels, stoking M&A.

(Editing by David Holmes and Hans Peters)