BHP's show of strength in Potash bid

BHP Billiton's monster earnings expected today could strengthen its hand in its $39bn (£25.3bn) bid for fertiliser group Potash Corp and intimidate any rival bidders.

The world's biggest miner is set to report a 50 per cent jump in second-half profit to $6.9bn, sending a loud warning shot towards Potash, which is trying to line up white-knight bidders to fend off the world's largest miner.

"Clearly it's going to be a very good result ... The balance sheet is in excellent shape and the cash flow will be significant," said James Bruce, a portfolio manager at Perpetual Investments, which owns BHP shares.

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On Monday, Potash, the world's biggest fertiliser company, talked up the chances of a counterbidder, in a move analysts said might be aimed at coaxing a higher bid from BHP.

A report said global miner Rio Tinto might be considering a bid for Potash with a Chinese partner.

Yet investors, analysts and bankers have played down the chances of Rio bidding for Potash as it has only just slashed $40bn in debt from an ill-timed takeover of Alcan in 2007 and plans to spend $13bn on projects through 2011.

"I would be very surprised," said Adam Dixon, portfolio manager at Ausbil Dexia, which owns BHP and Rio shares.

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