China threatens to launch inquiry into BHP's £26bn PotashCorp bid

Chinese regulators are considering an investigation into BHP Billiton's proposed $40bn (£26bn) takeover of Potash Corporation of Saskatchewan.

According to local media reports, the Chinese monopolies watchdog is weighing up inquiries into both BHP's takeover bid and into the proposed merger between two Russian potash suppliers, Uralkali and Silvinit.

If a monopoly investigation goes ahead, it is not clear how much influence Chinese watchdogs could bring to bear on the BHP deal. The Anglo-Australian company is set to make a series of regulatory filings in relation to the proposed takeover, but the focus is on the US and Canada, where PotashCorp is based and where it sells more than a third of its output.

PotashCorp produces around 20 per cent of the world's potash, although only about 7 per cent of its output is sold in China. But Chinese law sets a ceiling on revenues within the country, beyond which foreign mergers may require approval. A tie-up between BHP and PotashCorp could be above this threshold.

Although BHP has potash assets in Canada that it could develop in the future, it is likely to try to counter any investigation by the Chinese on the grounds that it does not currently produce potash or compete with PotashCorp in any markets.

China has been watching closely since BHP launched a $130-per-share offer for PotashCorp that swiftly turned hostile after the target's management derided it as "grossly inadequate". It is the world's second-biggest importer of potash, which is used to make fertiliser, and buys nearly half of its requirement from abroad. The Middle Kingdom's sovereign wealth fund and the state-owned fertiliser company, Sinofert, were both tipped as possible white-knight bidders to help push up the share price towards the $150-plus that PotashCorp is thought to want.

Although the PotashCorp chief executive, Bill Doyle, said "all sorts of different players" had contacted the company in the week after it rejected BHP, so far no rival bidders have come to the table. Some, such as the Brazilian mining giant Vale, have actively distanced themselves from rumours of putative moves on PotashCorp.

But Sinochem, Sinofert's parent company and China's biggest fertiliser trader, has neither ruled itself in or out. Feng Zhibin, a vice-president of Sinochem, said last week that his company was "closely watching" the fracas between BHP and Potash. The group has also confirmed that it is "interested in overseas potash investment opportunities".

Meanwhile, the row between BHP and PotashCorp mnoved up a gear earlier this week when PotashCorp's sales director, Stephen Dowdle, described BHP's "cold calls" to PotashCorp shareholders as "highly unethical" behaviour designed to "sow seeds of doubt and confusion about the future" of the company.

BHP's unchanged $130-per-share offer represents a 16 per cent premium to PotashCorp's share price on the day before the offer was made. Since then, the fertiliser group's stock has shot up by 31 per cent to more than $147, indicating a widespread assumption in the market that the FTSE 100-listed miner will raise its offer.

The BHP chief executive, Marius Kloppers, has not ruled out increasing his offer. But last week, as he unveiled results which showed that its second-half profits were up 47 per cent, he stressed that BHP would remain "disciplined" about the bid. "The shareholders own the company and it is my job to create more value for them, not to do any one thing at any cost," he said.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones