By Euan Rocha and Michael Erman
TORONTO/NEW YORK (Reuters) - BHP Billiton denied speculation on Monday that it planned to sell any of Potash Corp's assets if it succeeds with its $38.6 billion hostile bid for the world's largest fertilizer producer.
Even so, analysts believe that BHP, the world's largest miner, would offload assets that are not part of its core strategy of dominating the global potash industry.
If it decided to do so, BHP may find a ready buyer in Agrium Inc, the Canadian fertilizer maker and farm products retailer. Agrium indicated it would consider buying Potash Corp's nitrogen and phosphate assets, which are worth an estimated $12 billion.
BHP's denial came in response to a note from Mark Gulley, a Soleil Securities analyst who listened in on a BHP briefing in Toronto last week. He wrote that the Anglo-Australian miner was considering a sale of Potash Corp's nitrogen and phosphate assets in the event of a deal.
Potash -- the common name for various compounds containing potassium -- accounts for the majority of the Saskatoon, Saskatchewan-based company's fertilizer assets, with the rest made up of the other two fertilizer groups.
"At this stage BHP Billiton has no plans to sell any Potash Corp assets. Our offer is for the whole company, including the phosphate and nitrogen businesses," a BHP spokesman said, referring to Potash Corp.
National Bank of Canada analyst Hari Sambasivam said the company told those at a Toronto briefing on August 26 that it had no plans to divest assets. Still, he also seemed unconvinced that BHP would necessarily keep all the assets over the long term.
"We came away with the view that BHP will not move abruptly to monetize the non-potash assets, although such a move may be contemplated over the long term," Sambasivam wrote in a note.
BHP Chief Executive Marius Kloppers and other executives have been touring North America to tout the benefits of the proposed bid to both BHP and Potash Corp shareholders, many of whom own shares of both companies. Kloppers met with investors in New York on Monday.
Investors who were at the meetings said that the executive was staying on message, stressing that the $130-a-share bid was the only bid on the table, and that BHP would stay disciplined on price.
Kloppers also sought to ease concerns about BHP's possible move to exit Canpotex, -- the joint venture through which Potash Corp, Mosaic Co and Agrium Inc market their production overseas -- investors said. Canadian regulators might object if BHP pulled out of the venture, as it initially signaled.
Potash Corp's rejection of BHP's offer has raised speculation that it will have to raise its bid significantly to clinch a deal.
That has led analysts and investors to speculate that BHP may quickly offload any Potash Corp assets that it considers outside of its long-term plans.
BHP's spokesman denied the company would need to do so: "Our financing is not dependent on asset sales and we do not require divestments to maintain balance sheet strength," he said.
Shares of Potash Corp closed up 86 Canadian cents at C$155.85 on Monday on the Toronto Stock Exchange.
The company's shares have risen 33 percent since the BHP offer was made public on August 17 and now stand 20 percent above the bid price, signaling anticipation of a higher offer eventually.
OUTSIDE INTEREST
If BHP opts to eventually sell any Potash Corp assets down, they are likely to generate sizable interest among strategic buyers.
Agrium Chief Executive Mike Wilson told Reuters on Monday his company was strong financially and would look at any assets up for grabs.
"We are a global company that produce 8 million metric tons of nitrogen, phosphate and potash and markets 16 million, so any assets that came on the market that fits with us we would certainly look at," he said.
Agrium is finalizing a $1 billion takeover of Australian wheat exporter AWB Ltd, just months after it was forced to back out of a hostile bid for CF Industries, a U.S.-based fertilizer producer.
Both Agrium and CF, along with Terra Industries and Norway's Yara, were involved in a year-long, four-way takeover battle. It ended after the $4.7 billion CF-Terra deal scuppered Agrium's plan to snap up CF, while forcing Yara to bow out of a bidding war for Terra.
Yara, Mosaic and CF are also all seen as potential bidders for any of Potash Corp's phosphate or nitrogen assets, should they eventually come up for sale.
(Reporting by Euan Rocha in Toronto and Michael Erman in New
York; Editing by Frank McGurty)
