BHP looks to stymie Potash Corp white knight hunt

MELBOURNE/NEW YORK (Reuters) - BHP Billiton plans to step up pressure on takeover target Potash Corp with a request to remove a poison pill, sources said, as the world's biggest miner gets set to report massive profits on Wednesday.

The move to request the removal of Potash's shareholder rights plan would force the Canadian company to work faster as it seeks to line up a white knight to fend off BHP's $39 billion hostile bid.

BHP plans to ask a Canadian commission to end Potash Corp's poison pill early if the bid appears likely to receive regulatory approval, sources familiar with the matter said on Tuesday.

Potash Corp adopted a 90-day shareholder rights plan last week in response to BHP's hostile $39 billion bid, and that plan would trigger a massive dilution in shares if a single investor acquires a stake of more than 20 percent.

But BHP can ask a provincial securities' commission to have the shareholder rights plan lifted early so it can take up shares tendered to its offer.

Hostile bidders have had success removing poison pills in Canada in the past. Investor Carl Icahn successfully had a shareholder right's plan adopted by Lions Gate Entertainment voided earlier this year.

One source, who spoke on the condition of anonymity, said BHP could ask to have the pill removed within 30 to 45 days after its August 20 bid.

BHP Billiton filed an application for review of the takeover on Friday under the Investment Canada Act, setting out why it believes the deal will bring a net benefit to Canada. The government has up to 45 days to respond, making an answer likely by October 4.

BHP, which has put an October 19 deadline on its offer, declined to comment.

BOOMING PROFIT

The move came as the U.S. Securities and Exchange Commission charged two Spanish residents with insider trading in Potash Corp shares before BHP announced its bid.

The SEC alleged that the Madrid, Spain residents made nearly $1.1 million in profits using material nonpublic information to illegally trade Potash securities before the BHP announcement.

BHP is due to report annual results at around 2 a.m. EDT on Wednesday, with analysts expecting second-half profit rising 50 percent to $6.9 billion before one-offs, according to a survey of 13 international brokers.

Its shares have dropped 6.6 percent since it announced the bid for Potash Corp, underperforming a 0.5 percent dip in rival Rio Tinto, as investors are worried about the risks BHP is taking on with the bid and see Rio as a safer mining play.

Potash Corp shares slipped 0.7 percent on Tuesday to $149.11, trading 15 percent above BHP's offer.

Potash Corp investors polled by Reuters said they would be willing to accept an offer around $162 a share, while many analysts think an offer around $157 would clinch a deal.

(Additional reporting by Rachelle Younglai in Washington; Editing by Lincoln Feast)

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