By Sonali Paul and Eric Onstad
MELBOURNE/LONDON (Reuters) - BHP Billiton, the world's biggest miner, tried to dampen expectations it would substantially raise its hostile $39 billion bid for Potash Corp as bumper results showed it has plenty of firepower.
"I will be as disciplined on this bid as I've been on every other endeavor," Chief Executive Marius Kloppers told a conference call with reporters on Wednesday.
"The shareholders own the company and it's my job to create more value for them, not to do any one thing at any cost."
Analyst Paul Galloway at Bernstein Research in London said there was no reason for BHP to boost its bid in the near term.
"At the moment if BHP raised the bid they would be just bidding against themselves. So really the next move is from (Potash CEO) Bill Doyle, who claims that he's got an alternative. I think BHP will be waiting to see what that alternative actually is."
Potash Corp shares in New York, which have gained 31 percent since BHP unveiled its bid on hopes of a sweetener, fell 1.5 percent to $146.87 by 1420 GMT, compared to a 0.5 percent fall in the Dow Jones industrial average.
The shares are still about 13 percent above BHP's offer.
BHP posted its best half-year profit in two years, and its hefty balance sheet and net annual cash flows of $17.9 billion confirmed the miner has the financial muscle to raise its $130-per-share offer for the top global fertilizer maker.
Net debt for the group, which has lined up $45 billion in loans for the Potash deal, fell 58 percent from the end of last year to $3.3 billion, with net gearing down to a mere 6 percent.
BHP could probably go up to close to A$200 dollars ($177) a share in its Potash Corp bid, said Ric Ronge, portfolio manager at Pengana Capital in Australia.
"In the absence of another bidder for those assets, BHP is doing the right thing in the sense it's basically offered a price... and is waiting for a response," he said.
Kloppers hinted that any possible higher offer would have to wait until BHP got regulatory approvals for its takeover plans.
"We'd like to, on the Potash transaction, clear the preconditions so that we've got a bid that is capable of being accepted. That's what you should look forward to as we proceed through the remainder of this calendar year," he told analysts.
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.
Responses from investors on price ranged between $130 and $200 per share.
One key question for shareholders will be whether BHP would 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.
Some shareholders worry about the risks BHP is taking on, expanding in 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.
Kloppers said he and other executives are due to embark on a four-continent roadshow to talk to its investors, about half of whom overlap with Potash shareholders in North America.
BUMPER PROFITS
Net profit before one-offs for January-June rose to $6.77 billion from $4.59 billion a year earlier, in line with analysts' forecasts of around $6.9 billion.
BHP shares in London dipped 2.3 percent, in line with the UK mining index as metals prices slid.
BHP said it was cautious on the short-term global outlook and that the economy in China, its biggest customer, would slow.
"Following a broad recovery in prices for the majority of BHP Billiton's products, the short-term outlook for commodities is mixed," the company said.
Kloppers sounded much less confident about winning regulatory approval for its planned iron ore joint venture with Rio Tinto that aims to save the partners $10 billion in costs.
"Clearly over most of the last year, reality has turned out that it has been slower and more protracted than we would have anticipated."
INSIDER TRADING
BHP's bumper profits came as the U.S. Securities and Exchange Commission charged an equities derivatives trader with BHP adviser Banco Santander and another Spanish resident with insider trading in Potash shares.
The SEC alleged the two made nearly $1.1 million in profits using nonpublic information to illegally trade Potash securities before the BHP bid announcement.
"Clearly it's something where more press about something is not useful in any bid if it's not focused on progressing things forward, but it's a Santander issue, not a BHP Billiton issue," Kloppers told a news conference.
BHP plans to ask a Canadian commission to end Potash'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.
Speaking at a news conference, Kloppers did not sound worried about a possible counter-bidder.
"Given the size we've got, given the all-cash nature of what we've got...given the statements that have been made by other potential bidders, it doesn't seem to me to be an enormous universe of potential interlopers here," he said.
($1=1.130 Australian Dollar)
(Additional reporting by Julie Crust in London and Rachelle Younglai in Washington; Editing by Lincoln Feast, Erica Billingham and Michael Shields)
