Russian firm confirms interest in Potash Corp

4th November 2010, Comments 0 comments

Russian agricultural firm Phosagro on Thursday confirmed it was interested in Potash Corp, a day after Canada rejected BHP Billiton's hostile takeover bid for the world's largest fertilizer maker.

Phosagro chairman Vladimir Litvinenko is a close ally of Prime Minister Vladimir Putin and media reports have said he has written to the Russian strongman pinpointing the Canadian firm as a key strategic asset.

"Phosagro is examining the possibility of taking part in a transaction to buy shares in Potash Corp," the company said in a statement.

"Phosagro is carrying out intensive negotiations with the Russian government and Russian and foreign banks about a possible transaction. Phosagro intends to announce its future intentions after November 15," it added.

Canada's industry minister on Wednesday rejected BHP Billiton's hostile all-cash takeover bid for Potash Corp valuing it at 38.6 billion dollars. The firm itself has rejected the offer as "wholly inadequate."

BHP now has 30 days to sweeten its offer before a final decision is made. It said it was "disappointed" by the decision and will "review its options."

The importance of potash fertilizer has soared over the last years owing to mounting demand for food in the world. Rapidly-expanding China, which has also expressed an interest in Potash Corp in light of the BHP Billiton bid, is a major importer of the product.

Russia is already a major potash fertilizer producer and according to the Vedomosti newspaper, Litvinenko told Putin that the country would control 70 percent of the world market if Phosagro launched a successful bid.

Litvinenko said that financing for half the purchase had already been agreed with Canadian banks while the other half would need to come from Russian financial institutions such as main state lender Sberbank.

Russia's two leading potash producers, Silvinit and Uralkali, would not be appropriate bidders due to anti-monopoly concerns, Litvinenko said in the Vedomosti report.

© 2010 AFP

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