Potash Corp puts pressure on BHP to raise bid

Mon Aug 23, 2010 7:10pm EDT
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By Euan Rocha and Michael Erman

TORONTO/NEW YORK (Reuters) - Potash Corp said on Monday it has held talks with other possible suitors as it ratcheted up pressure on BHP Billiton to raise its $39 billion offer for the world's largest fertilizer producer.

A source close to the matter said China's Sinochem was one of the parties that had discussions with the Canadian company. But Brazil's Vale -- one company that had been widely pegged as a possible suitor -- pulled itself out of the running.

Potash Corp formally rejected the $130-a-share bid launched last week by the Anglo-Australian mining giant and said it expected an alternative bid to emerge. Shares of Potash have surged above $150, signaling that investors expect a higher bid from BHP or a rival bidder.

"There are a number of people who have contacted us ... all sorts of different players. People would be surprised at what we're seeing," Potash Corp Chief Executive Bill Doyle said in an interview. He declined to identify any of the parties.

Still, without Vale as a bidder, the universe of potential white knights is shrinking.

"I don't think BHP will get it for $130 (a share)," said one banker who is not working on the deal. "But do I see an obvious player to come in as a genuine white knight? No."

Potash urged shareholders not to tender to the BHP offer, which may well turn out to be the biggest takeover deal in any industry this year.

Doyle, who stands to earn a half-billion dollars from a deal, said that the company was considering all its options including joint ventures and levering up the company's balance sheet. He did not name a value that would be acceptable for the company, but said it should be "a hell of a lot more than the price on the table."   Continued...

<p>A train car waits in line at the Potash Corp's Cory mine site near Saskatoon August 19, 2010. REUTERS/David Stobbe</p>