HONG KONG/TORONTO (Reuters) � China's Sinochem Corp has hired investment banks to look at toppling BHP Billiton's $39 billion 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 fertilizer 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 authorized 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 percent by 0215 GMT 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.
BHP BOSS LOBBIES CANADA
Kloppers, in a separate interview with Canada's Globe and Mail newspaper, said BHP was sticking with its plan to drop out of the Canpotex potash marketing cartel -- effectively triggering its demise -- if BHP's bid succeeds.
He spent the day in Toronto, Canada's financial hub, aiming to drum up support for the bid and seeking to allay concerns that BHP's strategy would hurt Potash's home province of Saskatchewan.
BHP says all of Saskatchewan's low-cost producers would benefit from market-based pricing, generating more revenue for the province, but sources working on the deal told Reuters that the miner would not move quickly to dismantle Canpotex.
Potash shares on Tuesday fell 95 cents to $147.52 in New York but remain well above the $130 offer price, suggesting investors anticipate a richer offer will eventually emerge.
Kloppers said BHP was focused on clearing regulatory hurdles in Canada and the United States, not on potential rivals.
BHP this week extended its offer by a month to November 18 after Canada's competition regulator sought more information.
The sources working on the deal said regulators wanted more details about BHP's plans for its existing Jansen potash project in Saskatchewan and its marketing strategy.
The regulatory process is taking on political overtones, with some opponents of the deal fearing a breakup of Canpotex, which accounts for a third of global potash exports and has helped buoy prices for years. Potash Corp is one of three Canpotex members.
Kloppers is due to meet Canada's leading opposition parties on Wednesday, but will not meet Prime Minister Stephen Harper.
BHP has hired three former advisers to Canadian prime ministers, including one who worked for Harper, to help build political support.
(Additional reporting by Michael Erman in New York and Euan Rocha and Cameron French in Toronto; Writing by Michael Flaherty; Editing by Frank McGurty and Anshuman Daga)
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