* Phosagro calls for Russia joint bid for Potash stake
* Says BHP bid would damage interests of Russian groups
* Says Russia Deputy PM has made moves to examine idea
* Decision by Canada on BHP's bid due on Wednesday - source
* Analysts say successful Russian bid seems unlikely
(Releads, adds Phosagro Chairman comment, detail)
By Polina Devitt
MOSCOW, Nov 3 Russian fertiliser group Phosagro
wants Russian firms to buy a stake in Potash Corp (POT.TO) in an
attempt to scupper BHP Billiton's (BHP.AX) $39 billion offer
awaiting a crucial ruling from the Canadian government.
Phosagro Chairman Vladimir Litvinenko said he had asked
close ally and Russian Prime Minister Vladimir Putin to approve
a potential move and examine the financial details, saying
Russian interests were at stake if BHP was allowed to succeed.
"The potash market is being consolidated and so far we have
been only watching ... If BHP controls the potash market, the
consequences for our producers may be serious... We can lose
part of markets," he told Reuters in a telephone interview on
He said Russian and Western banks could be involved in the
bid both as lenders and investors, but ruled out a full takeover
approach for Canada's Potash Corp (POT.N), the world's biggest
producer of the key fertiliser component.
"We are not talking about a takeover. It can be a merger or
a stake purchase," he added.
His comments will reignite speculation about a possible
bidding war in the world's biggest takeover for 2010 and came on
the day Ottawa is due to tell BHP whether it will approve or
reject the deal.
Two Canadian newspapers reported on Tuesday that
bureaucrats were advising the government to allow BHP's bid for
the world's largest fertiliser market although rumours swirled
in the markets that Ottawa would block it. [ID:nN02206060]
The federal Canadian government will announce its decision
after 4:30 pm (2030 GMT) on Wednesday, an official said.
For other BHP-Potash stories [ID:nN22340110]
SCENARIOS ON BHP's Potash bid [ID:nN02225218]
BHP/Potash timeline r.reuters.com/zew32q
World's top potash producers
A serious Russia threat will crank up the pressure on BHP
Billiton Chief Executive Marius Kloppers, who is having a second
crack at a multi-billion dollar hostile deal after the collapse
of a takeover bid for Rio Tinto (RIO.L) (RIO.AX) in 2008.
Phosagro is the third biggest Russian potash producer behind
Uralkali (URKA.MM) and Silvinit SILV.MM, while Beraluskali,
the world's second biggest player, is a trading partner.
Uralkali and Silvinit are currently being merged by potash
tycoon Suleiman Kerimov, prompting speculation that Russia is
trying to create a national potash champion. [ID:nLDE66I071]
"Phosagro, Uralkali and Silvinit in alliance with
Belaruskali -- (together) we are a very strong player. And we
have a chance to either strengthen it or get a serious challenge
from BHP," Litvinenko said.
Troika Dialog said a successful bid would put Russia in
control of 65 percent of global potash trade -- a key component
of world food supplies, while Credit Suisse analysts added that
Potash Corp could have drummed up the Russia bid as a 'white
knight' defence to the unwelcome BHP offer.
Both expressed doubt the move would succeed.
"From a (Potash) shareholder point of view, you don't
necessarily want to have a blocking stake. You could also say
you wouldn't necessarily want a highly leveraged investor, who
in due course might be forced to sell its stake," analyst Tom
Gidley-Kitchin at Charles Stanley in London said.
Putin and Litvinenko have been close allies since Putin
defended his 1997 PhD thesis at the St Petersburg institute
where Litvinenko is rector.
No serious rival bidders for Potash had previously emerged.
Potash has said it held talks with 15 strategic, financial and
state-sponsored potential bidders and investors but admitted in
a tough market, a white knight would need more time to raise
Potash has flatly rejected BHP's current $130-a-share offer
as inadequate and has repeatedly said it expects other offers.
Potash Corp shares ended 1.1 percent lower in New York on
Tuesday, while BHP Billiton's shares closed up 0.8 percent in
Sydney on Wednesday.
BHP stock eased in London (BLT.L) after rising the previous
session on market talk that Canada would block a takeover of
Potash or impose tough conditions that would scupper the bid.
A "yes" from Ottawa will likely prolong the takeover battle
and it may well force BHP to raise its bid.
Since BHP announced its bid in late August, the stock has
held well above the offer price, as investors bet that a higher
bid will eventually emerge.
Canada's Conservative minority government risks alienating
its political allies in Saskatchewan if it allows the bid. But
the pro-business government risks sending a damaging anti-market
message to the global investment community if it blocks the
(Additional reporting by Sonali Paul in Melbourne and Maria
Kiselyova in Moscow; Writing by John Bowker and Michael Smith;
additional reporting by Eric Onstad: Editing by Michael Shields
and Hans Peters)