Beijing has officially ordered state-owned companies to explore ways to block BHP Billiton’s (BHP.NYSE, BLT. LSE, BHP.ASX) US$39 billion takeover bid for Canada’s Potash Corp (POT.TO), Reuters reported, citing anonymous sources. The most likely bidder is Sinochem (600500.SH), which is holding meetings with Citigroup (C.NYSE), HSBC (0005.HK) and Morgan Stanley (MS.NYSE) regarding the investment. A source said that Sinochem might also tie up with sovereign wealth fund China Investment Corp (CIC). Canadian pension fund Alberta Investment Management also reported being approached by Chinese firms. Beijing is concerned that a BHP takeover of Potash would allow the company to exert strong pricing control over a key fertilizer commodity required by China’s agricultural sector. Potash management has expressed opposition to both BHP’s proposal and any prospective Chinese bid, as has the Saskatchewan government. The sources said that the most likely scenario is that a Chinese consortium would take a minority stake in Potash that would leave control with Potash but block any potential BHP bid.
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