China's Sinochem Corp has hired investment banks to look at toppling BHP Billiton's $39bn (£24bn) bid for Potash Corp, sources said, as the miner warned it would not be caught in an expensive bidding war for the world's largest fertiliser group.
State-owned chemicals group Sinochem has hired Deutsche Bank and Citigroup to evaluate measures to foil BHP's bid for Potash, sources with direct knowledge of the matter told Reuters. The sources were not authorised to speak publicly on the matter.
Both banks declined comment. Sinochem could not be immediately reached for comment on Wednesday, a public holiday in China.
Though it was still unclear whether a serious rival bid from a Chinese consortium would emerge, news of the banking mandates underscored China's willingness to try and stymie the deal with a rival offer or by buying a blocking stake in Potash.
Late on Tuesday in Canada, BHP Chief Executive Marius Kloppers said he was unconcerned by the possibility of a rival bid emerging for the Potash, and said the miner would rather drop its bid than raise the offer to a level that exceeded good value for its shareholders.
"If somebody offers a price at which we cannot demonstrate value for our shareholders, we're probably not going to show, and I think that continues to be the case," Kloppers said in an interview with Canada's Business News Network.
BHP shares in Sydney edged up 0.3 per cent by 3:15 a.m. in line with the broader market. Investors suggested BHP might raise its offer but it was still unclear whether a serious white knight would emerge.
"It is all part of the game. BHP has made a bid at $130 and you would suspect that's not their final bid or otherwise they would have said it is final," said James Bruce, a portfolio manager at Perpetual Investments, which owns BHP shares.
"Our view remains unchanged. As a BHP shareholder, we think they are offering a full price for the assets and a far more value-accretive move by the BHP board would be to buy back their own stock rather than pay up for Potash Corp."
On Tuesday, Potash's U.S.-listed shares closed at $147.5, a 13.5 percent premium to BHP's offer.
Sinochem had not yet decided whether to proceed with a formal bid and was exploring its options, one of the sources said.
Chinese officials have ordered state-owned companies to meet investment bankers to explore options. Sinochem has approached Singapore's Temasek Holdings to join a consortium that may make a bid, sources have told Reuters.
City A.M. Reporter