Potash Corp is trying to stitch together a consortium led by China to back a management buyout to trump BHP Billiton’s $38.6bn hostile offer, according to the Globe and Mail.

Potash Corp has said ever since BHP launched its bid nearly a month ago that it was working to find a white knight, and worries in China about BHP getting control over the market for a key crop nutrient have spawned talk that China would try to block BHP.

Citing unnamed sources, Canada’s Globe and Mail reported on its website the bid being considered would include a big element of capital from a Chinese resource company or investment fund, with smaller contributions from international sovereign wealth funds and possibly Canadian players such as pension funds.

It also said rival potash producer Mosaic Co could be part of the consortium.

“It is a viable option,” the newspaper quoted a source close to Potash Corp saying.

The source added that it was tough to put together a structure for the consortium and that other options were still possible.

“It is still a big cheque to write … and it is a challenge to manage multiple parties,” the source was quoted saying.

A Potash Corp spokesman in Melbourne declined to comment on the report.

Sinochem Corp, parent of China’s largest fertiliser distributor, Sinofert Holdings, has expressed concern over BHP’s bid for Potash Corp.

Unlikely consortium
Analyst Tom Gidley-Kitchin at Charles Stanley in London said such a consortium would be unwieldy since China as the world’s top potash consumer would want to keep a lid on potash prices while other investors would have the opposite motive.

“Everyone else who might come into a consortium like that if they weren’t Chinese would be certainly interested in maximising returns and doing everything that BHP would be doing,” he said.

“I do think that local regulators (in Canada) would certainly be asking themselves why the Chinese were getting involved here. China would be taking quite a risk in getting involved in something like this is there was a significant possibility that regulators would stop it.”

The deadline for BHP’s offer is October 19, but it needs clearance from regulators before going ahead.

The Globe and Mail report came a day after a respected Chinese business magazine Caijin quoted an official at Sinochem saying that a bid for Potash Corp would not be a good deal for the firm but it may consider other assets of the world’s biggest fertiliser maker.

The magazine has since deleted any comments from the Sinochem official from the report on its web site.