Alistair Dawber: Textbook tactics – but they don't always work

Bid. Rejection. Go hostile. For BHP Billiton, and Marius Kloppers, the $38.5bn (£25bn) bid for PotashCorp must feel like Groundhog Day.

Mr Kloppers' tactics in trying to land the Canadian fertiliser giant are textbook: make an offer, and wait for others to move. But the tilt at PotashCorp is not the first time BHP has used this line of attack.

Three years ago, and months after BHP's closest rival, Rio Tinto, indebted itself up to the gills buying another Canadian company, the aluminium giant Alcan, Mr Kloppers launched an audacious $135bn raid on Rio.

During 2008, the two traded arguments until the credit crisis, and a raft of terrified regulators, put an end to the deal. Although both now say the focus is on their Australian iron ore joint venture, speculation that BHP has not fully given up on its rival won't go away. Rio has spent the last two years shedding the debt pile and, as analysts have pointed out, if BHP was attracted to Rio with the debt, she must look a lot prettier without it.

It has been argued that Mr Kloppers won't get the chance to go after more M&A if he can't pull off the PotashCorp deal. While the financial crisis could not have been predicted, the failure to land Rio Tinto caused embarrassment, not least when it was revealed that BHP had splashed out $450m on fees, getting nothing in return.

Mr Kloppers sidestepped questions yesterday on how much BHP was paying in fees to the assortment of bankers, lawyers, accountants and PR advisers working on the PotashCorp bid. Asked if he believed his job could be threatened if the bid were to collapse, he said: "This deal is about creating value for shareholders, it goes beyond me. It will be not be measured by my ego, or anyone else's."

He has indeed created a lot of value in his three years as chief executive and asking him to fall on his sword would be a big mistake. But there are enough analysts who believe BHP's shareholders are not well served by the latest M&A adventure, and that he will have some difficult questions to answer if it turns out to be a flop.

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