Sinochem Considers $10 Billion Potash Bid Too Big, Caijing Says

Sinochem Group, China’s biggest fertilizer trader, considers even a $10 billion bid for Potash Corp. of Saskatchewan Inc. by itself as too much, Caijing magazine said, citing Han Gensheng, the company’s vice president.

The purchase doesn’t make financial sense, Han said, according to the magazine. The purchase would need approval from the Canadian government, and a Chinese state-owned company may lack the experience in handling queries, the magazine said, citing Han, who is in charge of overseas acquisitions.

BHP Billiton Ltd., the world’s biggest mining company, has made a hostile $40 billion bid for Potash Corp., which has said it’s seeking other suitors. The lack of a Chinese counteroffer so far may strengthen Melbourne-based BHP’s bidding position, and success will give the world’s biggest mining company more control over the supply of commodities into China.

“Canada historically hasn’t been receptive to acquisitions by state-owned enterprises,” Glyn Lawcock, an analyst at UBS AG, said. Lawcock said China is unlikely to make a bid.

Li Qiang, head of the president’s office at state-owned Sinochem, didn’t answer calls to his office in Beijing.

The Chinese government hasn’t received any applications from companies to bid for Potash Corp., Ministry of Commerce spokesman Yao Jian said today in Beijing at a briefing.

Few Competitors

There are few companies that can compete with BHP, Han said, according to Caijing magazine. Without a rival, all BHP needs to do is to consider a “small” increase in its offer to be successful, the magazine cited Han as saying.

Sinochem Group made initial inquiries with Potash Corp.’s board about the possibility of holding talks, a person with knowledge of the matter said last month. Sinochem and its Sinofert Holdings Ltd. unit are “closely watching” BHP’s bid, Sinofert’s Chief Executive Officer Feng Zhibin said Aug. 26.

“Investing in resources overseas is a very complicated issue, and companies should be aware of the risks,” Yao from the commerce ministry said today, responding to a question on whether Sinochem Group has filed for permission to bid. He didn’t specify companies or elaborate.

Chinese investors approached Alberta Investment Management Corp. to consider a joint offer for Potash Corp., the Canadian pension fund said Sept. 2. Any Chinese offer would have to overcome objections from the Saskatchewan government, which said an offer by state-owned enterprises won’t be in the interest of the province where Potash Corp is based. A state-owned company may lower prices which won’t be in the interest of taxpayers, the province’s Energy and Resources Minister Bill Boyd said.

Sinochem said there may be opportunities to buy nitrogen, phosphorus or other Potash Corp. assets, Caijing cited Han in the interview.

--Helen Yuan, with assistance from Li Yanping, Elisabeth Behrmann, Huiwen Yang and Jin Jing. Editors: Tan Hwee Ann, Indranil Ghosh.

To contact the Bloomberg News staff on this story: Helen Yuan in Shanghai at hyuan@bloomberg.net;

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Sinochem Considers $10 Billion Potash Bid Too Big, Caijing

Nelson Ching/Bloomberg

Sinochem Group made initial inquiries with Potash Corp.’s board about the possibility of holding talks, a person with knowledge of the matter said last month.

Sinochem Group made initial inquiries with Potash Corp.’s board about the possibility of holding talks, a person with knowledge of the matter said last month. Photographer: Nelson Ching/Bloomberg

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Sinofert’s CEO Feng Zhibin

Timothy O'Rourke/Bloomberg

Sinochem and its Sinofert Holdings Ltd. unit are “closely watching” BHP’s bid, Sinofert’s Chief Executive Officer Feng Zhibin, seen here, said Aug. 26.

Sinochem and its Sinofert Holdings Ltd. unit are “closely watching” BHP’s bid, Sinofert’s Chief Executive Officer Feng Zhibin, seen here, said Aug. 26. Photographer: Timothy O'Rourke/Bloomberg