By Michael Smith and Alison Leung
SYDNEY/HONG KONG (Reuters) - BHP Billiton's chief executive flies to North America this week to crank up the charm offensive with Potash Corp shareholders, as a potential Chinese rival bidder reiterated it was "closely watching" the $39 billion deal.
After dousing expectations he would sweeten his hostile bid for the fertilizer giant, BHP Chief Executive Marius Kloppers and his other executives were also preparing to brief their own investors on four continents after delivering the miner's richest half-year profit in two years.
China's largest fertilizer distributor, Sinofert Holdings Ltd, said on Thursday it was worried the deal would have a big impact on the firm but would not say if its parent, state-owned chemicals giant Sinochem Group, was planning a rival offer.
"No matter what, Sinochem and Sinofert are closely watching Potash," Sinofert Chief Executive Feng Zhibin told reporters at a results briefing in Hong Kong on Thursday.
"Potash is a major shareholder in Sinofert, and it will have a big impact," he added, noting that Potash Corp was a big supplier of the key crop nutrient to the company and had two directors on its board.
Potash Corp, which owns 22 percent of Sinofert, has rejected BHP's offer and is working hard to find an alternative deal, sparking speculation Sinochem might come to the rescue.
China is the world's biggest user of potash and there are fears BHP would ditch the prevailing annual contract potash pricing system in favor of a market-based approach if its bid was successful, as it has done with iron ore.
So far, Sinochem has shown no sign it is lining up a bid, turning a deaf ear to calls from Asia's loans bankers, according to banking sources.
KLOPPERS UNDER PRESSURE
BHP is likely to focus on wooing Potash shareholders with its current $130 per share offer and 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.
A Reuters survey indicated Potash shareholders would accept $162 a share.
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 Sinochem as a likely partner.
Loans bankers in Asia have been trying to line up meetings with Sinochem anticipating a bid for Potash Corp, but have received no feedback from Sinochem, said sources who declined to be named as they were not authorized to talk to the media.
The lack of response from Sinochem suggested that if plans for a rival bid were afoot, they were at a very early stage, sources said.
Funds are available for a rival bid, loans bankers said, but the syndication would have to be global because Chinese commercial banks were strapped for funds after lending freely for strategic acquisitions last year.
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 enough on its plate 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 London-listed shares rose 1.3 percent on Thursday. Investors have pushed Potash shares 12 percent above the $130 bid, betting BHP would eventually boost its offer, or that a rival bidder would emerge.
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.
(Additional reporting by Stephen Aldred in Hong Kong; Editing by Ed Davies and Lincoln Feast)
