Canada funds mull blocking stake in Potash: report

TORONTO (BestGrowthStock) – Alberta’s provincial money manager is leading discussions with some of Canada’s pension funds about a plan to preserve the independence of Potash Corp (POT.TO: ), a newspaper reported on Monday.

The plan, which is considered a long shot, envisions the funds taking an equity investment of about 30 per cent in Potash Corp, the world’s largest fertilizer supplier, according to Canada’s Globe and Mail. In theory, that would be enough to block BHP Billiton’s (BHP.AX: )(BLT.L: ) $39 billion hostile bid.

Sources who spoke on condition of anonymity told the paper that the plan is designed to satisfy the concerns of nationalists and Saskatchewan government officials who don’t want to see another Canadian resource company swallowed up in a foreign takeover. BHP is listed in Australia and the UK.

The plan also involves Potash Corp agreeing to devote the entire output of one of its larger mines to China in an effort to satisfy Chinese demands for a long-term, guaranteed source. The report said the supply contract would come with an “escalator,” in which the price would rise at intervals during the length of the contract.

“This might be an elegant solution for everyone,” said a source who is familiar with the effort, according to the article.

China has encouraged its state-owned enterprises to organize a rival Potash bid in an effort to secure long-term supplies of an agricultural input considered crucial to feed its expanding population. But the notion of a Chinese-led takeover of Potash Corp has also raised concerns in Canada.

The source, however, attached a fairly low probability to the success of the blocking stake idea, according to the report.

Sources told the Globe and Mail that the plan is being championed by Alberta Investment Management Co, known as Aimco, led by Leo de Bever, the fund’s chief executive and chief investment officer.

A spokeswoman at Aimco was not immediately reachable for comment.

(Reporting by Euan Rocha; Editing by Frank McGurty)

Canada funds mull blocking stake in Potash: report