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New BHP Bid for Potash Likely Very Soon

Expect things to move fast in BHP Billiton'sattempt to take control of Canadian fertilizer giant Potash of Saskatchewan, in a deal worth$38.6 billion. People close to the deal tell me that BHP is likely to initiate an offer for Potash very quickly, though the board of BHP has yet to make a firm determination.

Bhp Billiton Headquarters
William West | AFP | Getty Images
Bhp Billiton Headquarters

Until that day comes, Potash is taking the opportunity to aggressively market its value.

It preempted BHP by revealing the company’s interest. It has already held a conference call and accompanying slide presentation to further strengthen that case and is likely to continue this campaign after BHP makes its bid.

One question is at what price BHP will choose to begin its foray. Does it stick with the $130 price in the letter its CEO handed to Potash CEO Bill Doyle last Thursday or does it come at a higher price?

Another question: others bidders. Right now I’m hearing that Vale is making it clear to all who ask that it has no intention of bidding for Potash. BHP, as one of the world’s largest company’s, has enormous financial capacity and I am told will have no issues in raising the requisite debt financing for any deal.

Under Canadian law, BHP will have at least 90 days in which to convince Potash shareholders to tender into its bid, once made, and if it gets two-thirds of shareholders to support that bid, it takes control.

It is a straight forward process more closely resembling UK takeover law.

BHP shares slipped 3.5 percent in Asian trade Wednesday, on concerns the Anglo-Australian miner would be forced to over-pay in what already amounts to the world's largest takeover offer so far this year.

- Reuters contributed to this report.

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