Canada fund approached on Potash bid

City A.M. Reporter
POTASHCORP’S best hope of escaping BHP Billiton’s $39bn (£25bn) hostile takeover bid has received a blow from a local government minister.

Leo de Bever, chief executive of Alberta Investment Management (AIMCo) said yesterday that a variety of parties have approached the fund manager about entering into a rival takeover bid for PotashCorp, but that participating in a deal at this point is unattractive to AIMCo.

Alberta’s public sector fund manager had been approached by Chinese sovereign wealth funds and other parties about participating in a takeover offer to rival the hostile move by BHP.

“We can’t right now make the economics work,” said de Bever. “If it were to work it would take a consortium of pension funds, if you were to do it. But is that really appropriate for those pension funds?”, he said.

PotashCorp, based in the western Canadian province of Saskatchewan, which neighbours Alberta, is currently facing a $130-a-share hostile takeover bid from BHP, the world’s largest miner led by boss Marius Kloppers. Potash has rejected the offer as “grossly inadequate”.

De Bever noted that the cost of capital for Chinese sovereign wealth funds was a lot lower than it was for a Canadian pension fund, or a fund manager like AIMCo.

“I don’t want to speak for any other pension fund, but I think we are all uncomfortable being put in a position that isn’t particularly economical,” he said. De Bever said Chinese sovereign wealth funds are among those that can afford to make such major deals because their cost of capital is low. When asked which parties had approached AIMCo, de Bever said: “It’s been a variety of parties, including some of the sovereign funds.” He added: “We work with people in other countries all the same and we would be pleased to work with the Chinese entity if that made sense. It’s not that we liked or disliked the nationality of the capital.” However, de Bever did not completely write off AIMCo’s involvement in the potash sector saga. “Nothing is ever dead, but lets put it this way, it’s not the highest on my hit parade right now,” he said.