(Repeats to update link to poll)
* China mulls antitrust review on big potash deals -report
* Chinese law could require BHP to submit bid for review
* BHP declines comment; seeking only U.S./Canadian clearance
* Potash Corp shares trading 14 pct above BHP offer price
(Adds Russian analyst's comment, updates shares)
Michael Wei and Lucy Hornby
BEIJING, Sept 1 China may launch an antimonopoly
probe into BHP Billiton's (BHP.AX) (BLT.L) $39 billion bid for
Canada's Potash Corp (POT.TO), the China Business News said on
Wednesday, citing a source familiar with the matter.
China will also review the merger of two Russian potash
firms -- Uralkali (URKA.MM) and Silvinit SILV.RTS -- given the
major impact the two deals would have on China, the paper cited
the unnamed source as saying.
The report was another indicator that China, the world's
biggest importer of fertiliser, is wary of further concentration
in the market, following BHP Billiton's launch of a hostile bid
for Potash Corp (POT.N) last month.
But it was unclear what steps, if any, Chinese regulators
could take in opposition to the bid.
BHP declined to comment on the newspaper report, and China's
Ministry of Commerce was not immediately available to comment.
BHP has said the deal only needs approvals from regulators
in Canada and the United States, where Potash Corp sells around
half its production.
China buys around 7 percent of the output of Potash Corp,
which controls around one-fifth of world production of the key
crop nutrient. Potash demand in the country has been growing by
around 5-8 percent a year, faster than other fertilisers.
China consumes about a third of Russia's potash output, so
it was not surprising that Beijing was closely following the
potential of Uralkali and Silvinit teaming up to create the
world's second-biggest group in the sector after Potash Corp.
"China is one of the key consumers of Russian potash, and it
is natural for China to be worried that a merger would lead to
an increase in average prices, but it has no way to influence
the process," said analyst Anna Kupriyanova at Uralsib in
The Russian deal is expected to get speedy approval from
Russia's own anti-monopoly authorities since it was supported by
the state, she added.
Russia's deputy prime minister said on Wednesday he did not
oppose the union of Uralkali and Silvinit. [ID:nLDE680015]
For more on the BHP bid [ID:nN22340110]
For FACTBOX on potash pricing: [ID:nSGE67J088]
Breakingviews on China antitrust move [ID:nLDE67J0FM]
For an investor poll on BHP's bid price [ID:nLDE6801RS]
Insider on BHP debt link.reuters.com/zuq95n
Insider on white knight link.reuters.com/gak75n
StarMine comparative data: r.reuters.com/bep85n
BHP Billiton does not currently produce any potash but does
have potash resources it could develop in the future, including
the massive Jansen project in Canada. The mine would begin
producing in 2016 at the earliest, if the company approves
development in 2011.
China's largest fertiliser distributor, Sinofert Holdings
Ltd (0297.HK), said last week it was worried about the impact
that a BHP deal would have but would not say if its parent,
Sinochem, was planning a rival offer. [ID:nN26228720]
Government departments and state-owned Sinochem Group have
held meetings recently to review the possible impact the two
high-profile acquisitions could have on China and about possible
countermeasures, according to the source quoted by China
Business News on Wednesday.
BHP may yet have to submit paperwork on the deal to China's
According to Chinese law, its regulators have jurisdiction
over a foreign merger if two of the parties each have over 400
million yuan ($58.7 million) in sales in China in the last
fiscal year and if their worldwide sales exceed 10 billion yuan.
The BHP Billiton bid for Potash Corp appears to meet that
BHP Billiton might argue that since it currently does not
produce potash, a takeover of Potash Corp would represent a
change in ownership but no increase in market share.
However, Chinese regulators when evaluating the deal could
take into account future production from deposits that BHP owns,
including the Jansen mine, in projecting future dominance.
China's ability to enforce rulings in cases where neither
party has operations or assets in China is so far untested.
The test case is in fact BHP's proposed merger of its
Australian iron ore operations with those of Rio Tinto. Chinese
authorities have yet to rule on that merger, though Chinese
officials and the steel industry are adamantly opposed.
A Chinese fertiliser specialist said there was concern about
BHP getting control of Potash Corp adding to its own large
"So in terms of buying this resource, or negotiating, the
Chinese government and people don't want to see this kind of
concentration," Chen Li, a fertiliser expert at China National
Chemical Information Center, told Reuters Insider television.
"But this is a market operation, and no-one can block it. So
we can only rely on our own efforts to overcome the difficulties
if the takeover succeeds," she said, referring to efforts to
raise output in China and at Chinese-owned assets overseas.
On Tuesday, the Canadian province of Saskatchewan, the home
of takeover target Potash Corp, said it would have "lots of
concerns" about a Chinese sovereign fund or state-owned company
buying part or all of the company. [ID:nN31258430]
Potash Corp shares in New York had gained 0.5 percent to
$147.92 by 1445 GMT, 14 percent above BHP's offer on speculation
that BHP will have to raise its offer or that another company or
consortium might enter the fray.
BHP shares in London jumped 3.5 percent to 1,895 pence in
line with the broader London market .
(Additional reporting by Ken Wills in BEIJING, Sonali Paul in
MELBOURNE and Polina Devitt in MOSCOW; Editing by Lincoln Feast
and Will Waterman)