Canadian rival could scupper BHP's bid for PotashCorp

A Canadian pension fund could thwart BHP Billiton's hostile takeover bid for the world's biggest fertiliser producer.

UK-based BHP launched a 25bn bid for Canada's PotashCorp in August this year.

But the Ontario Teachers' Pension Plan, one of Canada's biggest pension funds which controls a 60bn portfolio, is thought to be planning a rival offer. The group is understood to be talking to Singapore's sovereign wealth fund Temasek about a bid.

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Discussions are at an early stage, but the two funds are thought to be considering either launching an outright takeover of the group, or buying a minority stake in PotashCorp at a higher price than the BHP offer in a bid to scupper the deal.

If the consortium bought a stake in the firm at above BHP's offer price, the firm would have to raise its bid or walk away.

BHP, which employs 41,000 people and has operations in 25 countries, made its $130-a-share (81.40) offer direct to shareholders after directors of PotashCorp dismissed an initial approach as being "wholly inadequate".

But PotashCorp's shares have been trading at well above this price since the bid was announced in August, closing at 91.32 a share on Friday.

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Shareholders at BHP are now said to be worried that the group's chief executive Marius Kloppers could pay over the odds for the group, which produces a fifth of the world's potassium fertiliser.

BHP is a market leader in the production of coal, copper and iron ore, and it is betting that demand for agricultural fertiliser ingredients will rise as the developing world requires more meat and plants.

Mr Kloppers has described the takeover move as an exciting opportunity to acquire a portfolio of market-leading assets and become a leading global potash producer.

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