BHP Billiton’s $US40 billion ($45 billion) bid for Canada’s Potash Corp has come under fresh attack from the target and faces the prospect of being gazumped by Chinese interests.

Already struggling to gain traction with its proposed $US130 a share offer, BHP and its advisers were tonight digesting news from Potash Corp that it had starting shopping itself around to potential higher bidders.

The board of Potash Corp tonight formally rejected the takeover bid from BHP and said that it saw “superior” offers or other alternatives emerging.

Potash Corp, the world’s biggest fertiliser group, also revealed that a number of third parties have expressed an interest in considering alternative transactions.

“Discussions are being pursued with several of these third parties in order to generate value enhancing alternatives,’’ the company said tonight.China’s top fertiliser company Sinofert, owned 22 per cent by Potash Corp, said last week that it would “pay close attention” to the BHP bid and that it was “interested in overseas potash acquisitions’’.And the Wall Street Journal is reporting that a consortium led by Chinese private-equity fund Hopu Investment Management is studying the feasibility of a counter bid.It said that the consortium was made up of investors from Canada, the US and Asia, and includes at least two sovereign wealth funds.

“No decision has been finalised yet on whether to proceed with a bid for Potash Corp,’’ the WSJ report said.Meanwhile, Potash Corp has resumed its attack on the BHP offer. Its formal rejection of the unsolicited BHP offer was contained in its schedule 14D-9 documents which have been filed with Canadian and US securities regulators.It said its board was “unanimous” in its belief that the BHP bid “substantially undervalues Potash Corp and fails to reflect both the value of our premier position in a strategically vital industry and our unparalleled future growth prospects.”BHP chief Marius Kloppers last week said that the $US130 a share offer was fair and full. He would not be drawn on whether BHP would increase the offer if the response to Potash shares trading well above the offer price. He said that the bid on the table was the only one that had been made.Mr Kloppers on Wednesday gets his chance to hit back at Potash Corp’s rejection – and raise questions about whether another bidder will emerge – at the release of BHP’s June year profit report.Market consensus is for a $US12.6 billion profit. Mr Kloppers has said that BHP’s ‘’prodigious’’ cash flow will be on display in the profit result and that the company expects to be able to complete the acquisition without affecting its credit ratings.Points made by Potash Corp in its rejection of the BHP tilt included:

  • The BHP bid offer fails to adequately compensate shareholders for Potash Corp’s strategic position in the global fertiliser industry, and its scarcity value.

  • It fails to reflect Potash Corp’s prospects for continued growth and shareholder value creation and is timed to deprive shareholders of full value.

  • The bid represents a “wholly inadequate” premium for control (16 per cent above Potash Corp’s price ahead of the bid announcement).

PotashCorp’s financial advisors have each provided a written opinion that the consideration is inadequate, from a financial point of view, to shareholders.

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