Sinochem Group may be unable to bid for Potash Corp. (POT), as the Chinese company is struggling to get state backing for the move.

The Chinese government has said it would prefer that the bid not be financed by credit from state banks, Bloomberg News reported without naming its sources.

Sinochem may still seek a minority stake in Potash Corp., which would be easier to finance.

In August, Potash Corp rejected a $40 billion offer from BHP Billiton (BHP) and went looking for other bids. China is eager to secure reliable sources of potash to help feed its massive population.

The state banks are unlikely to fund the deal without the approval of the government.

"If you give a super-high price, Canada will allow it to be sold, but does it make sense for China to buy?" He Wei, a Beijing-based analyst at BOCOM International Holding Co. told Bloomberg News. "If you look at history, China hasn't made any successful deal of that size so far."


Increase your money and finance knowledge from home

Understanding Stock Market Indexes

What does it mean when people say "the market is up 2%"?

View Course »

Introduction to Value Investing

Are you the next Warren Buffett?

View Course »

Add a Comment

*0 / 3000 Character Maximum