(Potash-BHP story updated with latest developments in the takeover drama.)

Welcome to BHP!



) --

BHP Billiton's

(BHP) - Get Report

hostile pursuit of

Potash Corp.


has as many moving parts as a cuckoo clock.

There are other clichéd similes available for use. As many chapters as a Russian novel; as many twisting roads and hidden mews as the street plan of Inner London.

In other words, it's tough to keep it all straight.

Thus, we've compiled a handy slideshow primer -- a manual, a Cliff's Notes, an A-to-Z guidebook -- that breaks down and explains all the elements (people, places, issues, obstacles) that will play a role in determining this story's ultimate ending.

It's a story, by the way, that also has a Big Theme and a lot at stake: possession of some of the best sources of a most profitable crop nutrient and, therefore, a highly lucrative hold on the nourishment of the world's billions.

>>Look for BHP to Pay Up for Potash

In the latest news, the government of

provincial prairieland Saskatchewan

, at times referred to as the Arabia of potash, has delivered its opinion of a BHP takeover of the region's biggest such company -- an opinion that will carry much weight when Canada's federal regulators ultimately rule on BHP's proposal -- and an opinion, therefore, seen as crucial to any deal occurring at all.

Taking its cue from a study commissioned by the Saskatchewanese to

investigate the economic impact a BHP acquisition of Potash

would have on the region, the provincial government said that such a deal "does not provide a 'net benefit' to the people of Saskatchewan and Canada."

The study, released on Oct. 4, concluded that a BHP takeover of Potash could remove 2 billion Canadian dollars from the province's coffers over the course of 10 years.

BHP Billiton executives, some of them dispatched semi-permanently to Ottawa and Regina, responded that, hey, these Saskatchewanders simply

need more convincing.

Lobbyists aplenty have been deployed by the mining giant, including the former chief press officer for the Canadian prime minister.

Both predator and prey have suffered setbacks of late. Earlier in October, for example,


, the Chinese government-controlled conglomerate -- and once Potash's best hope for a white knight, at least judging by the direction of most media reports -- apparently

decided to give up on a fight

it had never officially joined. The news would seem to have injured Potash's plan to avoid the clutches of BHP -- or at the very least to extract a higher price.

Looking ahead, the next important plot points in the drama come in mid-November, when BHP's tender offer expires and when Canadian regulators announce their decision on whether they would approve a deal, or not.

Also pending is a ruling on

the suit filed by Potash

in U.S. federal court, asking a judge to block BHP from moving ahead with its takeover attempt. In a complaint chock full of barbed language, Potash accused BHP of violating U.S. securities laws by issuing "false and misleading" statements about its offer, and by omitting important details.

BHP filed a motion to dismiss Potash's suit. A hearing is scheduled for Nov. 4.



>>Calderon, Alberto



>>Doyle, Bill


>>Poison Pill

>>Potassium Chloride


>>White Knight(s)


Another day, another dollar inside a Potash potash mine.

The crux of the complaint is that BHP's offer is conditioned on 50% of Potash's shares being tendered, rather than the 66.66% required by Canadian law, which Potash says is "unusually coercive."

The complaint contends that BHP has striven for years to "drive down" the price of Potash stock in preparation for the day when it would attempt to acquire the company. That's an echo of Potash CEO Bill Doyle's words early on in the drama, when he said that BHP's highly public efforts to develop its own potash mines in Saskatchewan were "a charade," and designed only to strike fear in investors. In Potash's view, BHP's ambitions in Saskatchewan amount to mere threats: by suggesting that it will flood the market with potash supply, BHP was purposefully "impairing the perceived future value" of Potash stock, according to the complaint.

In the end, it's perhaps appropriate that we've settled on the road-atlas metaphor for our ongoing roundup. After all, BHP top-siders, including CEO Marius Kloppers, have essentially been conducting an extended worldwide roadshow since Labor Day -- popping in on Saskatoon, Regina and Ottawa -- attempting to woo regulators as well as shareholders on both sides. They have not neglected New York or Chicago or Toronto or Sydney.

A large degree of overlap exists between the shareholder bases of both BHP and a certain fertilizer producer out of Saskatchewan -- both companies being mineral extractors on a global scale. Kloppers and his aides have almost certainly been attempting to ascertain just what price will convince those big Potash shareholders to sell.


BHP has held fast at its initial $130-a-share bid

. But almost no one believes that such an offer will get a deal done.

Potash shares rocketed as high as $150.20 immediately after BHP's pursuit came to light on Aug. 17. They have since retreated from those gains, trading at about $144 on the

New York Stock Exchange

as of Monday, Oct. 18.

BHP early on indicated that it couldn't fathom what other honest-to-goodness bidder could emerge from the rabble as a serious and credible

white-knight rival

. Others, however, can -- namely Potash itself.

Judging by the company's comments, and details leaked on occasion to the press, Potash has been busily -- and

perhaps now desperately

-- attempting to scare up some kind white knight.

Potash CEO Bill Doyle

has repeatedly told the world of mysterious meetings between Potash and unnamed "third parties" interested in countering BHP's offer. The company at one point publicized letters sent by Doyle to Potash shareholders as well as employees, which

aped comments already made by the Potash boss

in a series of video speeches posted on the company's web site.

But the fact remains: More than a month into this fertilizer saga, no other bidder has yet emerged.

With BHP and Potash locked in what has become a prolonged mating dance,

here's our compilation of the most important variables governing the outcome




>>Calderon, Alberto



>>Doyle, Bill


>>Poison Pill

>>Potassium Chloride


>>White Knight(s)



Looking for the spread.

After BHP's quest for Potash came to light on Aug. 17, it looked at first as though the arbs had poured en masse into Potash stock. (Merger arbitrage is when investors attempt to wring a profit on the spread between the stock price of a takeover target just after the news breaks and its price when an eventual deal closes.) On the surface, it looked like a ripe opportunity for this genre of short-term trader.

But that conventional wisdom has come in for revision. For the most part, the arbs have stayed away from this potent fertilizer-deal stock. The

Financial Times

has reported that the amount of Potash shares held by arbs is abnormally thin for an acquisition target -- a percentage in the "mid-single digits," the newspaper said.

That's because a perfervid M&A market has driven the stocks of takeover prey so high that most arbs find the bet too risky, says Thomas Kirchner, portfolio manager of the

Quaker Event Arbitrage Fund


"We're now at point where every deal seems to be trading at a sharp premium to the buyout price. Generally that's a bad environment to be in," Kirchner told


. Like most of his arb compeers, Kirchner has avoided Potash. He's especially concerned that a broader market pullback could torpedo the premium. "Maybe suddenly people will be happy to get 140 or 145," he said. "This is not a risk we're willing to take at this point."

With arbs largely out of the picture, the frantic turnover in Potash shares since the drama began is most likely the result of short-term speculators and high-frequency traders, Kirchner and others say.

Even Potash CEO Bill Doyle, in a series of videos recently posted on Potash's web site, weighed in on the merger arb discussion. "We expect arbitrageurs will not represent as large a portion of the shareholder base as in other, smaller transactions," Doyle said, by way of arguing that the company's "long-term" and "stable" base of owners "will ultimately decide the value of this company and what, if any, transaction will occur."

Other pros have fled the Potash scene, however. Lee Munson, who runs Portfolio LLC, an Albuquerque-based investment advisor and hedge fund, started taking long positions in fertilizer stocks, Potash in particular, as far back as January. The severe run-up in agriculture names even before the BHP news broke -- with the sector running based on spiking crop prices -- induced Munson to take profits. After Aug. 17, when Potash shares soared more than 20% during the session, he sold his remaining holdings.

"I'm not so confident that this company is going to find a white knight and get the premium that everyone is looking for," Munson says. "I think we could see Potash trade back down to the 140 level." He remains skeptical, too, of the recent rage among investors to isolate the next big buyout quarry from the world's larger fertilizer companies. He says, "I don't think people should be flocking to this ag thing right now."


The care and feeding of the vampire squid.

Everyone knows the old saw: The only winners in the wake of corporate mergers and acquisitions are the investment bankers.

Lee Munson has some advice for investors when it comes to this subject. "My whole premise is: when you get bankers and other fair-weather friends involved in a sector, just walk away. Wait until it simmers down and the bankers leave to go feed on someone else. Because they're vampires."

At last count, Potash and BHP had lined up nine of them as advisors and (in the case of BHP) creditors. If a deal gets signed, the firms stands to make, as a group, up to $190 million in fees, according to estimates by Thomson Reuters and Freeman Consulting.

That kitty won't be divided evenly. Two usual-suspect banks have surfaced as probable lead advisors on the deal --

Goldman Sachs

(GS) - Get Report

, whose downtown New York headquarters are pictured above, is counseling Potash on its defense, and


(JPM) - Get Report

is huddling with BHP in its pursuit.

This set has squared off before, though some swapping has occurred in the meantime. In 2007 and 2008, when BHP was attempting to swallow its Anglo-Australian twin,

Rio Tinto


, in what would have been a $100 billion-plus megatakeover (the financial crisis ended up scuttling the deal), Goldman Sachs advised BHP, and JPMorgan advised Rio Tinto. Going back even further, JPMorgan bankers sat at the table alongside Billiton when it merged BHP at the start of the last decade.

Other players in the proceedings, though their roles are likely secondary and perhaps even tertiary, are, on the Potash side, Bank of America Merrill Lynch and RBC Capital Markets. On the BHP side -- a team that also has agreed to syndicate a $45 billion loan for BHP should it complete the buyout -- the roster includes


(BCS) - Get Report


TD Securities


BNP Paribas


Royal Bank of Scotland

(RBS) - Get Report


Banco Santander


, whose role in the proceedings turned into a real plot thickener after one of its employees -- now former employee -- was charged by the SEC for insider trading, along with another man.

The pair, both Spaniards living in Madrid, allegedly used knowledge of BHP's as-yet-unannounced unsolicited offer to, of course, buy up Potash call options, though the evidence against them is mostly circumstantial. The $61,000 they spent turned into a cool $1.1 million -- before they got caught, that is.

Calderon, Alberto

Dealmaker supremo.

The Colombia-born Calderon is the top dealmaker in the gigantic BHP organization and, as such, he'll be directing the company's squadron of executives, bankers and lawyers in its hunt for Potash. At this, he has experience. He was the strategic brains behind BHP's nearly yearlong effort to merge with Rio Tinto back in 2007-08 (though that effort could be judged a failure), not to mention the big iron-ore joint-venture deal in Australia, struck with same last year, which still faces regulatory challenges.

Calderon is widely regarded as an intellectual among multinational mining empire builders. He has both a PhD in Economics (Yale) and a J.D. (Universidad de los Andes, in Bogata). As


reported recently in a mini-profile of Calderon, "In his globe-trotting on the job, he gets to know the countries he visits by reading novels by local authors."

The newswire also points out that Calderon has in the past exhibited an unflinching negotiating style; during the Rio merger talks, BHP held fast with its initial bid for three months before finally raising.

Calderon holds the title of chief commercial officer, and is seen as one of a group of BHP executives who could succeed Marius Kloppers as CEO. Before ascending to the top spot, Kloppers was chief commercial officer.


So you wanna buy some potash?

There are only 14 companies in the world that produce potash on a major scale for use as fertilizers. Many of those companies have grouped themselves into two "cartels." Under these cartels -- one in North America, called


, which dates back to the early 1970s, and a similar one in Russia/Belarus called Belarusion Potash Co., or


for short -- the members team up to sell their potash overseas.

Together, the cartels control some 70% of the world's potash supply. They've been called an oligopoly, a duopoly and, somewhat less than half jokingly, the "Organization of Potash Exporting Countries." Some critics have argued that OPEC has less sway over world petroleum than "OPEC" does over potash. As if to turn the industry's centralized structure into farce, the giant potash miner Belaruskali (a member of BPC), employs a person with the title "director of ideology."

The potash industry and its ideologists do not like the terms "cartel" or "oligopoly," but the fact remains that these consortiums have kept prices high, despite the fact that oversupply has been a condition of the potash market for something like two decades.

BHP, should it succeed in taking out Potash, would upset that apple cart by opting out of the North American cartel, Canpotex.

Eventually, at least.

The "BHP way" is to run its low-cost mines 100% full-throttle throughout the lifespan of the mine, no matter where in the cycle the global commodities markets might stand. Further, BHP prefers to "stand in front of its own customers." That is, the collaborative international marketing conducted by Canpotex's three owners -- Potash,


(MOS) - Get Report



(MOS) - Get Report

-- would be anathema to BHP.

Further still, BHP officials have noted that the commodities world has moved ineluctably to shorter-term pricing. See, for instance, the recent and radical change in the way iron ore is priced on the global market, moving from an annual system to a quarterly one based on the fluctuations of the metal on the spot markets.

However, BHP has also said that, should it succeed in obtaining Potash, it would not withdrawal from Canpotex the instant the ink dries on the signatures. "The idea that after the deal closed, we'd flick the switch and change everything, that's just not the case. People got a little over-excited about," a BHP spokesman said. "

Long term

we'll move to our model."

Should BHP and Potash come to an agreement, the Canpotex issue will prove pivotal to the decision by Canadian governmental bodies to approve the deal, or not. That's because the cartel is viewed as vital to Canada's economic fitness (or, more specifically, Saskatchewan's), and such considerations are, by law, the most important criteria in the approval process.


Feeding the billions.

The world's largest consumer of potash is, not surprisingly, its most populous nation.

China used nearly 8 million metric tons of the stuff in 2009 (though that's down from a peak of 11 million before the financial crisis). Between half and two-thirds of that sum was imported, a circumstance that has contributed to a certain angst among government officials in the country, at least judging by their public comments lately. The jist: they'd prefer to have more control over a substance so crucial to China's food supply.

(Despite its angst, China is the sixth-largest potash producer in the world, nearly double the size of the U.S. The other great potash nations are, in descending order of size: Canada, Belarus, Russia, Germany and Isreal. Something near 90% of the world's potash comes from this handful of countries. Canada is the granddaddy of them all, accounting for a third of all the potash that's produced on earth.)

What potash deposits exist in China won't be enough, it's widely believed, to meet the growing demand for fertilizers in the Chinese farm belts. On the one hand, that's good for players elsewhere in the world, since that very growth will mean bigger profits. (Indeed, it's the chief reason that BHP is aiming to acquire the world's largest owner of these long-lived assets.)

On the other hand, the relative paucity of potash in China has induced fertilizer companies there to look overseas for acquisitions. There have been rumblings this year about an acquisition in Belarus -- home to the second-largest potash deposits on earth, behind Saskatchewan. And, of course, several Chinese names have been cited as potential white knights for Potash Corp.

Inside BHP, the threat of a Chinese interloper doesn't cause much alarm. According to one person there, the thinking is that a Chinese company taking any large stake in Potash would face huge regulatory hurdles, not least of all from U.S. authorities. Why? Half of the potash that Potash mines goes into the fields of the American bread basket.

Doyle, Bill

Potash Man

Much has been made of the hundreds of millions of dollars that Potash CEO William Doyle stands to pull if BHP were to buy the company he joined in 1987, when it was still owned by the Saskatchewan provincial government. With his three million in Potash stock options, Doyle would, if he didn't believe the bid to be "grossly inadequate," create for himself a paper fortune of something close to $450 million should his company accept BHP's current offer of $130 a share.

After helping marshal Potash onto the public markets, after serving as head of sales, Doyle took over as CEO in 1999, at which point he increased capacity as well as prices, boosting the company's profits and its stock value. The strategy paid off in spades during the pre-crash commodities boom, when the price of potash reached bubble levels: $1,000 a ton on the spot market at the headiest moment of the boom. But events since then have exacerbated a situation that has long been a condition of the potash market: overcapacity.

A native Chicagoan who lives and works in the suburbs of his hometown rather than in distant hardscrabble Saskatoon, the headquarters of his employer, Doyle has not been immune to other criticisms. He has tangled with Potash's labor unions. He has angered farmers by telling them that they ought to be happy to pay high prices for potash, since no other known nutrient enlivens crops to such a degree.

Doyle has even troubled some investors, who have wondered why Potash didn't use some of the cash on its balance sheet to repurchase shares. Chris Damas, an investor and agriculture-stock analyst based in Ontario, believes Potash shares, pre-BHP, would have traded around $150 had it instituted a buyback plan.


Core sample.

It's been called a "charade" and a "smokescreen" by Potash's Bill Doyle.

It has roiled the potash industry ever since BHP began its development two years ago.

We're talking about the potash project BHP has been pursuing in Saskatchewan, nearby a district called Jansen Lakes and not far from Potash Corp.'s own rich deposits. The Jansen mine, as it's called, could become an important bargaining tool for BHP. Indeed, it already has.

BHP has said the Jansen mine will begin production by 2015.

In the photo above, BHP engineers are examining a potash core sample taken from the Jansen earth. Many hurdles remain to be cleared, not the least of which are environmental -- building potash mines, which can extend thousands upon thousands of feet deep, are difficult to build and often must pass through subterranean aquifers.

BHP says the Jansen deposit is huge, and could end up being, once it reaches full production many years hence, the world's largest potash mine, churning out some 8 million metric tons a year. That would amount to about 15% of all the potash produced in the world in 2008. Jansen's output, then, will have serious repercussions on the global price of the stuff.

BHP says that its commitment to Jansen remains unchanged in the wake of its Potash bid. It will, in other words, continue to develop the mine no matter what. Brandishing Jansen like a bludgeon (in effect saying: "Look what we can do to global supply and, therefore, stock valuations.") would appear to enhance BHP's ability to stand firm on its offer price -- which, in fact, it has done.

Poison Pill

M&A Pharmacy.

The shareholder rights plan, also called a "poison pill," enacted by Potash to help shield itself from BHP's grip is something of a misnomer when it comes to Canadian securities law.

In Canada, some deal pros call it a "chewable pill." That's because corporate takeover rules in the Great White North are generally looser than those in the U.S., favoring the pursuer over the pursued.

To put it another way: In Canada, shareholder rights plans have typically been used to


hostile takeovers so that rival bidders have a chance to emerge, thus improving the odds that offer prices rise, to the benefit of stock owners. Pills are rarely used in Canada to out-and-out kill hostile takeover attempts, though speculation had been that this could be changing, in the wake of a decision in Ontario that allowed a poison pill to stand with no expiration date. In that case, however, the shareholders of the target had voted in favor of a deal-killing pill.

As for Potash, its rights plan would be triggered if some entity were to acquire 20% of the company's outstanding stock. At that moment, the plan would allow for Potash shareholders to receive, in effect, the right to buy six new Potash shares for the price of three. They can get their Potash shares at half off, in other words. This would dilute the stock (by a factor of six, obviously) and make a hostile acquisition of the company unattractively steep in price.

But it likely won't get that far. For one thing, the Toronto Stock Exchange needs to approve the shareholder rights plan, which it hasn't done yet. Secondly, BHP could work to have it called off. Hostile bidders have the ability to call joint hearings on the triggering of the rights plan, which would occur in Saskatchewan, overseen by the provincial securities commission.

Such a hearing would take place before BHP's tender offer expires, on Nov. 18.

Potassium Chloride

White gold.

The first patent ever granted by the U.S. Patent Office, in 1790, covered an invention by one Samuel Hopkins, described as "the making of Pot ash and Pearl ash by a new Apparatus and Process." From antiquity, people used this form of potash (potassium carbonate) to enhance agricultural soils. It was leached from the ashes of hardwood trees, mostly; Hopkins had developed a better way to go about it. His patent was signed by both Washington and Jefferson.

Potash is basically salt. There are several varities of it, but modern fertilizers are made up of almost entirely one kind -- potassium chloride -- and it comes mostly from mineral veins that lie deep below the surface of some of the flattest and bleakest continental basins on earth: the Russian steppe, for example, and the northern Great Plains in Canada. The vast salt bodies buried there are the remnants of ancient oceans.

Indeed, potash is also produced by evaporating the water of highly alkaline lakes (see the Dead Sea, where

Israel Chemicals

operates potash extraction facilities), or from subterranean brines, such as exist in the Permian Basin of New Mexico, famous for its Carlsbad Caverns.

Part of the reason potash mines take so much money (at leat $2 billion) and so much time (as much as a decade) to build and get up and running is their necessary depth, and the fact that underground aquifers often stand in the way.

But the reward is potentially huge. Potash mines have noble life spans:


, for instance, could last as long as 50 years. And soluble potassium is judged to be essential to plant health.

In the words of the U.S. Geological Survey, "Potassium helps facilitate sugar movement through plants," which aids in growth, "and boosts resistance to stresses such as drought and disease."


Home on the range.

The government of Saskatchewan will play a pivotal role in any Potash deal. Should a blockbuster transaction go down, overseeing it will prove an unprecedented undertaking for this obscure Great Plains province.

Just over one million people live in


, whose borders encompass some 230,000 square miles. That's like taking the population of Austin and spreading it out over the whole of an otherwise vacant Texas. Regina, the capital, is Saskatchewan's second city, surpassed only by the appealingly named Saskatoon, where Potash Corp. makes its home. (The place is full of pleasing place names, it turns out: Moose Jaw, Swift Current, Ravenscrag, Livelong, Lloydminster, Lac la Ronge.)

So provincial is the province, in other words (even the

CEO of its largest corporation

refuses to live there), it will be interesting to watch how its government deals with the regulatory challenge it faces.

If BHP does succeed in striking a deal to acquire Potash -- or if any party does, for that matter -- Saskatchewan would hold the keys to its consummation. The deal requires the approval of

Investment Canada

, an agency that regulates foreign interests taking stakes in Canadian companies. But that entity will look to Regina for direction, and the provincial government, in turn, will look toward the opinion of Saskatchewan's Ministry of Energy and Resources.

Bill Boyd is the head of that ministry. "It will be the province of Saskatchewan who makes the ultimate decision," he told

The Street

from Regina not long after BHP went hostile in August. And that decision, he said, "will be based on the economic well-being of the province."

The skepticism inherent in Boyd's voice when he spoke with


emerged in full bloom on Oct. 21 when the province voiced its opinion of BHP's buyout proposal: Negatory.

Here's the crux, generated by the Regina press office: "The government has carefully evaluated the takeover bid and determined that it fails the 'net benefit' test in three key areas; jobs and investment, Canadian control of an important Canadian resource, and provincial revenues."

Boyd's ministry took its cue from a nonprofit research group called the Conference Board of Canada, hired by Regina to investigate the impact a BHP acquisition of Potash would have on the province. The report, released in early October, concluded that BHP ownership of Potash could subtract 2 billion Canadian bucks from Saskatchewan's coffers over the course of ten years.

It's hard to overstate the importance of potash the mineral (as well as the corporation) to Saskatchewan's economy. More than 50% of the world's known potash reserves lie beneath its treeless, wind-swept surface. Not for nothing has Saskatchewan been called the Arabia of potash. The industry accounts for about half of the provincial tax base. More perhaps than any group or entity outside Potash shareholders, Saskatchewan is levered to the fate of the fertilizer business. (The province owned Potash Corp. from its formation in 1975 until its IPO in 1989.) The industry in Saskatchewan employs more than 20,000 people. They are coveted jobs. "Some of our highest paid industrial workers work in the potash industry," Boyd said.

When it comes to BHP, Boyd's ministry is especially concerned about the mining giant's plans for its membership (or not) in


, the marketing consortium -- or cartel, if you prefer -- that is charged with selling potash to overseas buyers. BHP has said it would, at some point, likely opt out of the cartel. Saskatchewan authorities have worried that this will harm the province's economy.

"If Potash were to be outside of

Canpotex, we're concerned about what impact that would have on other players in the industry," Boyd said, referring to the other Canpotex members, including






, which have operations in Saskatchewan.

Indeed, that was another major point of contention in Regina's decision to disapprove. According to the province's math, BHP's decision to flout Canpotex would put $6 billion worth of "capital expansion and thousands of jobs at risk."

BHP isn't alone in drawing a jaundiced eye from the Saskatchewan powers-that-be. Boyd and Wall have also raised concerns about

Chinese players

taking stakes in Potash, though that prospect appears to have dimmed after Sinochem reportedly decided not to pursue a rival bid.

White Knight

The favorite.

Hostile takeover dramas almost always involve a flurry of white-knight speculation.

With the Potash affair, initial reports pointed to both of BHP's main international rivals --

Rio Tinto




(BHP) - Get Report

-- as potential suitors. But they faded from the headlines early on (though

Rio Tinto has reportedly been poking around Russia

for a potential investment in the potash industry there).

For weeks, the leading candidate to become a Potash white knight had been


, the enormous state-controlled chemicals concern. That's not entirely surprising, given the links the two companies already share.

One of Sinochem's units,


, is the country's largest distributor of fertilizers. It also distributes to farmers in China crop nutrients imported from the overseas potash


. As such, Potash owns 22% of Sinofert. (Oh, the tangled webs.)

Futher, Chinese officials had reportedly become so unnerved by BHP's move to subsume Potash that they "ordered" the country's industrial chieftains to investigate possible bids for the Canadian target.

But then on Oct. 15 came word -- via


-- that Sinochem was stepping aside from a fight it had never officially entered. Up until then, speculation about Sinochem's aims had run rampant:

It hired investment bankers at

Deutsche Bank

(DB) - Get Report



(C) - Get Report

to help it explore a possible bid for a stake in Potash that would stymie BHP.

It held talks with

Temasek Holdings

, the Singapore sovereign wealth fund, about pooling funds to make a run at Potash.

It was part of a group of players coming to Potash's aid by conducting a leveraged buyout (with Doyle and his fellows still sitting in the C-suite), according to Canada's

Globe & Mail

newspaper -- a situation that drew some ridicule, since it seemed an unlikely, if not exactly unholy, alliance.

Outside of Sinochem, multiple reports had pointed to another potential Chinese white knight: the private-equity fund

Hopu Investment Management

. Hopu, which isn't government controlled, could be looking to form a consortium. One of Hopu's most significant investors, however, is Goldman Sachs, which could make for a

bit of a conflict.

Then there's the case of

Alberta Investment Management

, or AIMCo, one of Canada's largest pension funds, with assets under management of about $67 billion. A fairly large Potash shareholder, the fund was evidently approached by a Chinese group about placing a rival offer on the table. AIMCo turned down the group down. This is all according to AIMCo's CEO, Leo de Bever, who mentioned the tete-a-tete in a press conference to discuss the fund's annual report. He declined, however, to identify the Chinese group.

"From an economic standpoint, getting into a bidding war with BHP is probably not the best way to deploy our capital," de Bever said.

As crunch time approaches and no counteroffers emerge, Potash has been frantically attempting to cobble something -- anything -- together. According to Canada's

Globe & Mail

newspaper, Potash has approached a group of investors with the notion of taking the company private with an LBO, with Potash management remaining in the C-suite and likely receiving some equity to boot.

The consortium, the


sources claimed, could include a sovereign wealth fund and a Canadian pension fund and -- staking the most coin for the deal -- a Chinese government-controlled industrial cooperative. (Can you say "Sinochem?") It might even include, these sources went on,


(MOS) - Get Report

, Potash's potash rival, which you'd think would draw more than a little antitrust scrutiny from the relevant authorities.

The idea of such motley crew actually owning Potash drew ridicule. The

Wall Street Journal

called the group less a white knight than a White Platypus, since its diverse makeup resembled "that homely, bedeviling mix-and-match creature."

As for Rio Tinto, Canada's

Globe & Mail

newspaper, citing "sources," reported that the company was at one point considering teaming up with an unnamed Chinese partner to make a bid.

But Rio, which doesn't have as strong a financial grounding as BHP, may still be a little gun-shy when it comes to Canada. In some ways, the roots of Rio Tinto's well-documented travails over the last few years started in the Great White North. In 2008, Rio acquired


, the Montreal-based aluminum giant, spending $40 billion. That wasn't the best moment to be making acquisitions. After the financial crisis, the company nearly sunk under its Alcan debt load. One way it helped reduce that debt was by selling off potash mines.

As for Vale, the Brazilian mining conglomerate has (like BHP) been eagerly adding to its potash and general fertilizer assets for some time, throwing some $10 billion at the effort. The company reportedly contacted Potash's board not long after BHP's hostile pursuit came to light on Aug. 17. But, some days later, all the media attention forced Vale to issue a statement, calling the Potash pursuit rumors "totally unfounded."

Internal Brazilian politics could be the decisive factor dampening Vale's willingness to make a play for Potash. It would be a gigantic undertaking financially as well as politically. The Brazilian government, through state investment funds that are large Vale shareholders, effectively controls the company. And the government has been highly vocal in its desire for Vale to spend its development capital at home rather than abroad.


The Big Theme.


science of potash

and its effect on plants is, at bottom, what has brought the industry suddenly into the global business spotlight, and for perhaps good reason.

Almost all media reports addressing the BHP-Potash affair cite the planet's population growth and the sustainability of it. Throw in the specter of severe climate change -- fears that have increased during a summer of extreme drought, heat, and flooding -- and people have been made to wonder about the impact all this might have on the global food supply.

This sort of mildly millennial thinking has informed BHP and its blockbuster push for Potash. Talk to an executive at the Aussie miner about the company's overarching strategy and worldview, and he or she may very well sketch a chart on a cocktail napkin as a kind of visual aid.

It will depict the growth in demand among emerging economies for raw materials and natural resources. According to the doodle, iron ore demand spikes first as steel is needed to build the cities that all those rural folk are fleeing to. Eventually it levels off. Copper comes next as all those cities build out their electrical grids and as housing booms increase the need for wire. And so on and so on until you hit ... fertilizers.

As the middle classes enlarge, so too do eating habits. Beef is desired where once vegetables did the trick. Cattle demand increases. Cattle feed demand increases. And so, therefore, does the need to enhance the yields of your acres of corn.

As the executive describes this scenario, he or she may have a sparkle in the eyes, envisioning future potash profits, and you don't get the sense, at such moments, that his or her employer will stop short in its pursuit of those spoils.

-- Written by Scott Eden in New York

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