BHP Billiton Ltd. Chief Executive Officer Marius Kloppers faces greater pressure to win a hostile $40 billion bid for Potash Corp. of Saskatchewan Inc. after scrapping his second deal with Rio Tinto Group in two years.
“Given you’ve had two transactions that they haven’t consummated, both relating to Rio, I think there is some additional pressure to actually get this deal done,” Paul Cliff, a London-based analyst at Nomura Holdings Inc., said by phone. “Towards the end, BHP are more likely to raise the offer to get the deal agreed by Potash management.”
Kloppers needs Canadian approval for the bid for Potash Corp., which has rejected the offer and started talks with third parties. BHP and Rio yesterday abandoned a plan to save $10 billion in costs by combining Australian iron ore operations, following opposition from regulators from Asia to Europe.
“We expect the collapse of this deal along with the uncertainty of the Potash bid to lead to likely further underperformance of BHP against the other major mining companies,” Heath Jansen, a London-based analyst at Citigroup Inc., said in a report yesterday. “The official cancellation is a negative for BHP.”
BHP rose 0.1 percent to A$41.20 at 10:40 a.m. Sydney time on the Australian stock exchange. The stock has declined 4.5 percent in Sydney this year, compared with the 14 percent gain for the 100-member Bloomberg World Mining Index. Rio dropped 0.6 percent. Potash Corp., the world’s biggest producer of the crop nutrient, declined 1.2 percent to $143.21 in New York.
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