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Chinese interest in Potash Corp
By Victoria Thieberger and Rod Nickel |
September 4, 2010, Saturday
|
Print Edition
Print Edition
Chinese and other investors have approached at least one big Canadian pension manager about a bid for Canada's Potash Corp to rival BHP Billiton's US$39 billion hostile offer.
The disclosure by Alberta Investment Management Corp, which manages some C$70 billion (US$67 billion) in public sector pension funds, is one of the first pieces of hard evidence to back up speculation that China is looking for a way to derail a takeover of Potash Corp by the powerful Anglo-Australian miner.
AIMCo said it was not interested, because the economics did not work.
China's chemicals giant Sinochem has reportedly hired HSBC to evaluate options, and chatter persists that sovereign wealth funds, such as China's US$300 billion China Investment Corp, may also be seeking a bid of some kind. Given the size of the deal, all major investment banks not working with BHP or Potash Corp are pitching possibilities to Chinese clients, multiple investment banking sources in Asia have told Reuters.
But so far, no formal counter bid has emerged, only talk. The hefty price tag is still prohibitive for many potential suitors, bankers say.
Shares in Potash closed up 1.8 percent at US$148.55 on Thursday, 14 percent above BHP's US$130 offer price.
BT Financial Group portfolio manager Tim Barker in Sydney said the interest in Potash Corp from China, as it seeks to secure the future supplies of fertilizer it needs to rapidly boost food production, potentially changed the dynamics of the deal.
"Eventually, it is an interesting line to draw between an independent company important to a province, and allowing it to go to either a customer with a different set of objectives or let it go to a bigger independent company. It will test a few nerves," Barker said.
Saskatchewan Energy Minister Bill Boyd has raised concerns about China buying into Potash Corp and about BHP's stated intent to eventually market its potash offshore on its own, rather than through the export consortium Canpotex.
The province said it had asked the Conference Board, a nonprofit research body, to examine the effect of a takeover, including the conditions Saskatchewan might ask the federal government to impose on a deal and ways to mitigate risks from BHP's bid and any others that could come forward.
The disclosure by Alberta Investment Management Corp, which manages some C$70 billion (US$67 billion) in public sector pension funds, is one of the first pieces of hard evidence to back up speculation that China is looking for a way to derail a takeover of Potash Corp by the powerful Anglo-Australian miner.
AIMCo said it was not interested, because the economics did not work.
China's chemicals giant Sinochem has reportedly hired HSBC to evaluate options, and chatter persists that sovereign wealth funds, such as China's US$300 billion China Investment Corp, may also be seeking a bid of some kind. Given the size of the deal, all major investment banks not working with BHP or Potash Corp are pitching possibilities to Chinese clients, multiple investment banking sources in Asia have told Reuters.
But so far, no formal counter bid has emerged, only talk. The hefty price tag is still prohibitive for many potential suitors, bankers say.
Shares in Potash closed up 1.8 percent at US$148.55 on Thursday, 14 percent above BHP's US$130 offer price.
BT Financial Group portfolio manager Tim Barker in Sydney said the interest in Potash Corp from China, as it seeks to secure the future supplies of fertilizer it needs to rapidly boost food production, potentially changed the dynamics of the deal.
"Eventually, it is an interesting line to draw between an independent company important to a province, and allowing it to go to either a customer with a different set of objectives or let it go to a bigger independent company. It will test a few nerves," Barker said.
Saskatchewan Energy Minister Bill Boyd has raised concerns about China buying into Potash Corp and about BHP's stated intent to eventually market its potash offshore on its own, rather than through the export consortium Canpotex.
The province said it had asked the Conference Board, a nonprofit research body, to examine the effect of a takeover, including the conditions Saskatchewan might ask the federal government to impose on a deal and ways to mitigate risks from BHP's bid and any others that could come forward.
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