Sinochem Takes On BHP To Buy Potash Corp.
September 27, 2010 By Jeffrey McCracken and Zachary Mider, Bloomberg.com
Sinochem Group, China’s largest fertilizer trader, has emerged as the likeliest bidder to rival BHP Billiton Ltd.’s $40 billion offer for Potash Corp. of Saskatchewan Inc., sources familiar with the matter said.
Chinese authorities chose Sinochem as the country’s potential bidder and are allowing the Beijing-based company to begin piecing together an offer that would likely involve taking a majority stake in Potash Corp. Sinochem would prefer to involve Canadian pension funds or other Canadian investors to create more support for an offer, according to sources, who asked to remain anonymous because the talks are private.
Last month, Potash Corp. rejected Melbourne-based BHP’s $130-a-share bid as too low and said it’s seeking other offers. A bid by state-controlled Sinochem would indicate China’s desire to stop BHP, the world’s largest mining company, from controlling more commodity supplies to the country.
“The main issue is how to ensure this could be a good investment with reasonable returns as the potash cycle has bottomed out,” says He Wei, an analyst at BOCOM International Holding Co. “Potash is a strategic asset to China.”
The board, management, and advisers of Potash Corp. determined Sinochem will probably be the only other bidder, according to sources. Potash Corp.’s advisers have been in regular contact with Sinochem’s advisers, which include Citigroup Inc. and Deutsche Bank AG.
(Source: Bloomberg.com)
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