Potash Corp, the world's largest fertiliser firm, is seeking a buyer willing to top BHP Billiton's $39 billion (R 1.82 lakh crore) hostile offer after shareholders balked at a bid they considered too cheap.
BHP's close rival, Rio Tinto, has been touted as a potential, albeit unlikely, white knight for Potash Corp.
Rio chief executive Tom Albanese on Friday refused to comment on whether he would look at mounting a competing offer.
Both Rio and BHP were preoccupied on Friday in fending off fresh speculation that their $116 billion (R 5.41 lakh crore) iron ore joint venture would not get regulatory approval, potentially stripping an expected $5 billion (R 23,350 crore) in cost savings from BHP's coffers.
Potash Corp is soliciting alternative bidders willing to pay more than the $130 (R 6,071) a share offered by BHP, the world's largest mining company, a source said.
At $39 billion, the total value of the BHP offer is the highest in any industry this year.
"Any time you get something like this you explore all your options," said the source, who asked not to be named. "There are a lot of ways to get creative about this thing."
The source said that Potash Corp was confident that alternative bids would emerge for the leader of an industry with huge growth potential.
"The notion is that this is the Cadillac (a premium automotive brand in the US) of the (fertiliser) business."
Australian investment bankers not on the bid but with experience dealing with BHP and Rio also said other bids would be canvassed.
"The whole world out there is looking at what they can do here as this company is in play," one banker said.
Chinese firms could better the bid
BHP Billiton's $39 billion hostile bid for Potash Corp has set a high bar for rivals, but China could yet launch its own bid to secure supply of the vital crop nutrient.
Top Chinese fertiliser company Sinofert — in which Potash owns a 22 per cent stake — is the most logical candidate to lead a counter offer, industry sources say.
While Sinofert itself is small — its $3.8 billion (R 17,746 crore) market value is less than a 10th of Potash's — its parent, Sinochem Group, is a huge state-owned group. Sinochem, the country's biggest chemical trader and top fertiliser firm, had revenues of $36 billion (R 1.7 lakh crore) last year.
Aluminium giant Chalco, and state-backed chemicals company ChemChina, could also emerge as potential bidders, according to the sources. "There are numerous organisations in China who would chase potash (assets)," said an Asia-based investment banker.