BHP could sell some Potash Corp assets
Global miner BHP Billiton could look to divest the nitrogen and phosphates business of fertilizer maker Potash Corp if its $39 billion bid goes through, the company has told analysts.
BHP Billiton is chasing Potash Corp to become the world's largest potash supplier, with nearly one-fourth of the global market. Potash Corp formally rejected the offer last week and BHP now has to woo the Canadian company's shareholders.
BHP said that 70 percent of the value is in the potash assets and that over time it would probably look to possibly divest the nitrogen and perhaps the phosphates business, Soleil Securities analyst Mark Gulley said in a note to clients after a conference call last week.
The conference call was led by BHP's chief commercial officer, Alberto Calderon, who is also head of mergers and acquisitions.
With its takeover offer -- the largest in any industry this year -- BHP aims to vault to the top of a rebounding fertilizer industry, as the economies and populations of Asian powerhouses like China and India rapidly expand, lifting demand for crop nutrients.
BHP has lined up $45 billion in debt for the bid, and Chief Executive Marius Kloppers has said it does not need to sell any assets to help fund the deal.
Analysts estimate Potash Corp's phosphates business is worth around $7 billion and its nitrogen business is worth abut $5 billion, each ranked third or fourth in their industries.
Kloppers and Calderon are in North America this week to brief BHP shareholders, many of whom are also Potash Corp stakeholders, on the bid and the group's half-year results, its richest in two years.
BHP has played down the chances of raising its offer, saying it timed its bid to ensure that potential rivals, like Rio Tinto and Brazil's Vale, were not in a position to raise the stakes.
There is only one offer on the table, so why would we compete against ourselves? Chief Financial Officer Alex Vanselow said in an interview on Australian television on Sunday.
Potash Corp shares closed on Friday at $147.73, 14 percent above BHP's offer, indicating investors expect BHP to raise its offer or another bidder to enter the fray.
The current bid is not subject to a vote of BHP's shareholders. But under UK listing rules, if it sweetens the offer to be worth at least 25 percent of BHP's market value at the time, then it would need its own shareholders' approval.
(Reporting by Ed Davies and Sonali Paul; Editing by Balazs Koranyi)
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