Strong profits set to boost BHP’s bid case

MINER BHP Billiton is today expected to reveal robust full-year earnings, strengthening its case as it embarks upon a charm offensive across the globe to try and convince investors of the merits of its $39bn (£25.2bn) hostile bid for Canada’s PotashCorp.

Analysts expect BHP to deliver underlying earnings before interest and tax (Ebit) of $20.1bn, 10.4 per cent above last year’s $18.2bn figure.

The strong results will buoy BHP’s chances of winning over sceptical shareholders, who have expressed concerns at the likelihood of BHP having to stump up more than its $130-per-share offer if rival bids emerge.

Jack Gabb at Liberum Capital said: “In the long term the acquisition seems a reasonably good fit for BHP, and if they end up getting it at the current price, it will be viewed very positively by the market. But the danger is that the company will end up having to pay too much for this asset.”

Speculation over a counter-bid has focused on China, particularly state-owned entities which are greedily eyeing the world’s largest potash producer as a key strategic asset in light of the booming global population.

However, rival miners Vale and Rio Tinto have dismissed speculation over their interest in the firm. Rumours of a bid forthcoming from Vale were “totally unfounded”, the Brazilian company said. Rio chief executive Tom Albanese, when asked about his interest in the fertiliser industry, said: “I’m not a farmer, I’m a miner.”