Financial timespotash featured heavily in this weekend's financial times, ie the london paper.
FRONT PAGE - COMPANIES & MARKETS
Sinochem pays close attention to BHP's Potash move
By Leslie Hook in Beijing and Javier Blas in London
595 words
21 August 2010
FTFT
London Ed1
12
English
Copyright2010 The Financial Times Ltd. All rights reserved. Please do not cutand paste FT articles and redistribute by email or post to the web.
Beijing's interest set to disrupt bid
Oil group has been on a buying spree
Sinochem said yesterday it would "pay close attention" to BHP Billiton's $39bn (£25bn) hostile bid for PotashCorp .
The Chinese state-owned chemicals group said it was "interested in overseas potash investment opportunities".
The comments from Li Qiang, a representative of Sinochem, are the first signs of interest from Beijing.
Rival interest from China in the Canadian fertiliser company isexpected to disrupt BHP's bid, which so far is uncontested at $130 pershare.
Mr Li told the Financial Times that Sinochem and PotashCorp had a relatively good co-operative relationship.
"We are very attentive to what happens to them," he said, decliningto comment on whether the Chinese group could launch a counterbid.
Sinochem, China's fourth-largest oil and gas company, has been on a buying spree.
The group spent $3bn on a stake in a Brazilian oilfield in May and acquired UK-listed Emerald Energy for $875m last year.
It launched a $2.3bn takeover bid for Nufarm, the Australian fertiliser company, last year, although the deal failed.
Bankers not involved in the deal warned that China groups couldstruggle to put together a deal to disrupt BHP's bid quickly enough.
Analysts also noted that the Anglo-Australian miner could raise itsoffer. It has already arranged a $45bn credit facility for the bid,suggesting some room to improve its offer.
PotashCorp has strong links with China, the biggest fertiliser importer. The Canadian company owns a 22 per cent stake in Sinochem's listed subsidiary Sinofert, China's biggest fertiliser maker and distributor and the country's biggest importer of potash.
PotashCorpis a leading member of Canpotex , a fertiliser marketing group thatChinese buyers favour because it ensures reliable annual prices.
BHP yesterday formally tabled its offer at $130 per share in a regulatory filing.
The group said its offer was at an "attractive premium of 20 per cent to the closing price of PotashCorp's shares" the day before the miner's first approach.
But PotashCorp told shareholders "not to take any action regarding the offer", noting that it remained unchanged from the initial proposal.
"PotashCorp's board will make a recommendation to shareholders" at a later stage, it said.
PotashCorp shares in New York traded at $148.8 yesterday, well above the level of the Anglo-Australian miner's offer.
Beijing considers agricultural self-sufficiency a matter of national security but only produces enough potash to cover about half of its fertilising needs.
The country favours the current system of annual price contracts for potash. BHP has suggested it would shake up the 40-year-old potash pricing system.
While a Chinese counter-offer was one possibility, analysts said a stronger one was a joint venture or a strategic investment.
Another possibility is that China, either through state-owned banks or through China Investment Corporation, Beijing's sovereign wealth fund, could provide finance for a deal.
Sinochem has been hungry for agribusiness opportunities abroad.
After Nufarm, the Australian fertiliser group, accepted a rival Japanese bid, Sinochemvowed that it would "continue to strengthen our co-operation with theworld's agrochemical enterprises and unswervingly push forward theglobalisation of our agrochemical business".