WRAPUP 7-BHP sets Potash bid but may need to pay much more

* BHP formally launches hostile takeover offer

* Potash Corp tells shareholders to take no action

* Chinese companies could eye bid for Potash

* Potash shares up 33 pct since offer
(Adds details from poll, lawyer, updates share price)

By Michael Smith and Euan Rocha

SYDNEY/TORONTO, Aug 20 (BestGrowthStock) – BHP Billiton (BHP.AX: )
formally launched its hostile takeover bid for Potash Corp
(POT.TO: )(POT.N: ) on Friday but a poll of investors suggested the
world’s biggest miner would need to significantly raise its $39
billion offer to capture the top fertilizer maker.

Potash is already soliciting bidders willing to pay more
than BHP’s offer of $130 a share, a source close to the matter
said, prompting speculation that China, one of the world’s
biggest potash importers, may join the fray.[ID:nTOE67J035]

The source said Potash Corp was confident that it could
attract a competing bid, given the expectation for rising
demand for potash, an important crop nutrient.

The shrinking availablity of arable land in China and its
limited domestic supply of potash has increased the importance
of the nutrient for the world’s most populous nation, where a
growing middle class is increasing food consumption.

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For more on BHP’s bid [ID:nN22340110]

Insider on BHP debt http://link.reuters.com/zuq95n

Insider on white knight http://link.reuters.com/pyt26n

StarMine comparative data: http://r.reuters.com/bep85n

Graphic on BHP-Potash http://link.reuters.com/sum65n

Graphic on potash production http://r.reuters.com/meh36n

BHP – Potash deal calculator http://r.reuters.com/ruv65n

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

BHP officially kicked off its offer on Friday, taking out
full-page advertisements in Canadian and U.S. newspapers.

The bid will remain open until Oct. 19. [ID:nN20134259]

BHP faces an uphill battle as it tries to sell to
shareholders a bid that Potash Corp has rejected as inadequate.

A Reuters survey of large 11 shareholders suggested that a
deal could be done at $162 per share, or a total of $48
billion. A survey of 15 analysts produced an average answer of
$157 per share, or $46.6 billion.[ID:nLDE67J0PV]

A leading expert on Canadian corporate takeover law said
the fact that BHP had put a 60-day timeframe on its offer meant
that it was probably not concerned that a rival bid could be
filed and approved by regulators within that time.

“They may have decided they are still comfortable that no
one else could get in in under 60 days, given various
regulatory and other approvals under the Investment Canada Act
and Competition Act,” said the lawyer, who asked not to be
identified for business reasons.

“It’s not going to happen for anybody in less than 60 days,
so why not offer 60 days.”

Potash Corp advised its shareholders to ignore the BHP bid
until it could review the offer documents.

The company, based in the province of Saskatchewan,
declined to comment about possible rival bidders.

SINOFERT LOGICAL CANDIDATE

Top Chinese fertiliser company Sinofert (0297.HK: ) — which
is 22 percent owned by Potash — is the most logical candidate
to lead a competing offer, industry sources say.

Sinofert itself is small — its $3.8 billion market value
is less than a 10th of Potash’s.

But its parent, Sinochem Group, is a huge state-owned group
with revenue of $36 billion last year.

A spokesman for Sinofert said the company would “pay close
attention” to BHP’s bid, adding that the group “was interested
in overseas potash investment opportunities,” the Financial
Times reported.

Aluminium giant Chalco (2600.HK: ) (601600.SS: ) and
state-backed chemicals company ChemChina could also emerge as
bidders, said the sources who spoke to Reuters.

A Sinofert spokeswoman contacted by Reuters declined to
comment, while Chalco and ChemChina could not be reached.

“I assure you there are numerous organisations in China who
would chase potash (assets),” said an Asia-based investment
banker who has advised Chinese resource companies on overseas
deals.

“China has very few potash reserves for itself. It’s a
commodity which they’re going to be in short supply of. And
does China want to be over the barrel on yet another
commodity?” said the banker, who was not authorised to speak
publicly about the matter.

BHP’s close rival, Rio Tinto (RIO.AX: ), has also been touted
as a potential — albeit unlikely — “white knight” for
Potash.

Rio Chief Executive Tom Albanese declined comment on Friday
on whether Rio would consider a rival bid.

Both Rio and BHP (BLT.L: ) were preoccupied Friday fending
off speculation their $116 billion iron ore joint venture would
not get regulatory approval. [ID:nSGE67J006]

POTASH PUSH

India, China, the United States, and Brazil are the largest
users of potash in the world, but long-term trends suggest
China will soon surpass all others.

At $39 billion, BHP’s takeover offer is the highest in any
industry this year.

Reflecting anticipation of a sweeter bid, Potash’s New
York-listed shares (POT.N: ) have jumped by about a third since
the offer emerged, valuing the company at about $44 billion.

The shares rose 0.4 percent to $149.67 on Friday.

BHP shares fell 1 percent in Sydney on Friday in a weak
broader market (.AXJO: ) and were largely flat in London.

Potash Corp CEO Bill Doyle, dubbed by the media as the
“Fertiliser King” when potash prices spiked in 2007-2008,
stands to make up to $500 million if his company is taken
over.

BHP CEO Marius Kloppers is betting an increasingly hungry
world will pay dearly for potash.

About 150 countries use potash for their crops, but it is
only produced in about a dozen.

From the cane fields of Brazil to the rice fields of India
and China, potash is an essential nutrient to improve the
resistance of plants to disease and to boost crop quality.

Eight companies control more than 80 percent of global
supply: Mosaic Co (MOS.N: ), Agrium Inc (AGU.TO: ), K+S (SDFG.DE: ),
Uralkali (URKA.MM: ), Silvinit (SILV.MM: ), Belaruskali, Israel
Chemicals (ICL.TA: ) and, at the top of the heap, Potash Corp.

Russia moved closer to creating what could be the world’s
second-largest potash miner after Potash Corp when investors
friendly to billionaire Uralkali owner Suleiman Kerimov
acquired stakes in rival Silvinit this month. [ID:nLDE66I071]
[ID:nLDE67F0DD]

On Thursday, Uralkali said powerful Kremlin deal broker
Alexander Voloshin may soon join the company’s board.
[ID:nLDE67I0OJ]
(Reporting by Michael Smith in Sydney and Euan Rocha in
Toronto; Additional reporting by Rujun Shen and Jason Subler in
Shanghai, Joseph Chaney in Hong Kong, Scott Haggett in Calgary,
Rod Nickel in Saskatoon, Jennifer Kwan and Pav Jordan in
Toronto; Writing by Anshuman Daga, Eric Onstad and Michael
Erman; Editing by Phil Berlowitz and John Wallace)

WRAPUP 7-BHP sets Potash bid but may need to pay much more