BHP ready to abandon Potash but stands by 'fair' offer of $56m

BHP Billiton, seeking to acquire Potash Corporation for US$40 billion ($56 billion), says the offer is fair and that it will abandon pursuit of the company if it is not in the best interests of shareholders.

"If the value is not there, we have no trouble walking away from it," BHP's chief financial officer, Alex Vanselow, said."We will be in the potash business with Potash or without."

BHP made a hostile, US$130-a-share bid for Potash after the fertiliser producer rejected an initial offer as "grossly inadequate". Potash's board said it was seeking other bidders.

BHP, the world's largest mining company, could afford to pay as much as US$180 a share, Morgan Stanley said.

BHP's second-half net income doubled to US$6.59 billion from US$3.26 billion a year earlier, the Melbourne-based company reported on August 25. Chief executive officer Marius Kloppers reduced debt by 41 per cent and raised the dividend.

It was an "opportune time to make a bid", Vanselow said. "Our balance sheet allows us to raise the credit necessary to buy, the valuations match and basically, if you look at the landscape of competitors, they're not in the same position."

Last week Kloppers said the company was looking to make acquisitions beyond the bid for Potash.

- BLOOMBERG