By Sonali Paul and Michael Erman
MELBOURNE/NEW YORK (Reuters) - BHP Billiton plans to step up pressure on the $39 billion 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.
BHP Chief Executive Marius Kloppers is bound to be peppered with questions from investors and analysts about the hostile bid when he presents the group's results in London on Wednesday, in his first public appearance since announcing the approach a week ago.
Shareholders are worried about the risks BHP is taking on, expanding into a market it has never served, as it aims to tap an expected boom in demand for potash from farmers trying to boost crop yields to feed fast-growing countries like China and India.
"The question is not whether BHP can afford the bid. It's whether there's a strategic fit," said an investor who declined to be identified ahead of talking to Kloppers.
A key question will be whether BHP will be willing to raise its bid by more than 22 percent, which would require it to seek approval from its own shareholders for the deal under UK rules.
BHP also 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.
Such a move would force the Canadian company to work faster as it seeks to line up a white knight to fend off the bid.
Potash Corp adopted a 90-day shareholder rights plan last week in response to BHP's hostile bid.
The plan will trigger a massive dilution in shares if a single investor acquires a stake of more than 20 percent by giving existing shareholders the right to buy more Potash shares at a sharp discount.
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.
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, 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, one of whom was an equities derivatives trader with BHP adviser Santander, 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 0600 GMT 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 stock has dropped 6.6 percent since it announced the bid for Potash Corp, underperforming a 0.5 percent dip in rival Rio Tinto as investors bet Rio would be a safer mining play.
Leading into the result on Wednesday, BHP's shares were down 0.8 percent, while the metals and mining sector was down 1.2 percent.
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)
