BHP prepares Potash charm offensive after rich result

SYDNEY (Reuters) - BHP Billiton's chief executive flies to North America this week to crank up the charm offensive with Potash Corp shareholders after dousing expectations he would sweeten a $39 billion bid for the fertilizer giant.

Fresh from reporting its richest half-year profit in two years, executives at the Anglo-Australian miner will brief BHP investors on four continents on the results, but that is likely to be overshadowed by its bid for Potash.

BHP is likely to focus on wooing Potash shareholders with its current $130 per share offer. Chief Executive Marius Kloppers has sought to discourage expectations he might raise the bid.

Kloppers was expected to spend the coming weeks shuttling between Europe and North America, one source familiar with the situation said. BHP refuses to comment on the movements of Kloppers or other senior executives at the world's biggest miner.

The chief executive is under huge pressure to clinch his first major deal after three years on the job, and sources who have worked with him on previous deals said he was likely to be at the front-line of any efforts to win over Potash shareholders.

If BHP raised its offer above $158.50 a share, or $47 billion, UK stock market rules would require the company to get approval from its own shareholders because the purchase would exceed 25 percent of BHP's market capitalization.

Some BHP investors have indicated this might not be a problem as the miner was under huge pressure to grow.

"A company the size of BHP has so few options to grow and diversify the business. If they can get this (Potash deal) people are not going to turn around and say that was a ludicrous bid. We are dealing with a top quality asset," Limestreet Capital portfolio manager Stephen Bartrop said.

POTASH PLANS?

Analysts say Potash Corp could still foil BHP by selling assets into a joint venture at a price that implies a higher value for the whole company than BHP has offered, with China's Sinochem as a likely partner.

Sinochem subsidiary Sinofert Holdings could give some clue on its parent's intentions when it releases its first-half results in Hong Kong later on Thursday. Sinofert is 22 percent owned by Potash Corp.

The two companies considered big enough to mount rival bids on their own -- Vale and Rio Tinto -- have faded as prospective white knights. Vale pulled itself out of the running, while analysts think Rio has all it can handle after its ill-timed, $38 billion takeover of Canada's Alcan.

Some shareholders worry about risks BHP will assume if it acquires Potash Corp and expands into a new market. BHP aims to tap an expected boom in demand for potash from farmers trying to boost crop yields to feed countries like China and India.

BHP's Sydney-listed shares were trading 0.6 percent weaker at A$37.21 at 0243 GMT on Thursday after the company reported its results late on Wednesday when it revealed a hefty balance sheet and annual cash flow of $17.9 billion.

Investors have pushed Potash shares 13 percent above the $130 bid, betting BHP would eventually boost its offer, or that a rival bidder would emerge. A Reuters survey indicated Potash shareholders would accept $162 a share.

Kloppers has hinted a higher offer would have to wait until BHP received regulatory approvals for its plans, which is expected to take up to two months.

Sources familiar with the matter have indicated they do not expect any major regulatory hurdles.

(Editing by Ed Davies and Dean Yates)