Vale Denies Potash Play

Vale is rumored among suitors for Potash Corp as it defends itself from takeover by BHP, but the Brazilian miner denies it is interested in the Canadian fertilizer producer. Rumors of Vale buying or negotiating a purchase of any fertilizer maker are “completely unfounded,” it says in a statement. Vale and China’s Sinochem had been rumored as possible alternative buyers for the Potash, which officially rejected BHP’s offer to acquire the company for $130 a share, or about $40bn, saying it expects better offers from other parties it is talking to. Potash does not identify the other potential bidders. US-based equity research firm Dahlman Rose believes the Canadian government would not likely allow a takeover by a Chinese-controlled company, but says Sinochem could pursue a minority stake in Potash to try and block BHP. “Because Vale does not have BHP’s balance sheet strength or size, we believe that a bid by Vale would likely involve backing from another company. However, we believe that a Vale takeover of Mosaic is more probable,” the firm says. An equity analyst who covers Vale says it is likely that it inquired about Potash, but does not believe an offer is on the table. “Vale’s management has to at least take a look at the company as a duty to its shareholders,” he says. A Vale spokeswoman says the company does not comment on market rumors. Potash has hired Bank of America Merrill Lynch, Goldman Sachs and RBC to advise on alternatives to the BHP offer.