PotashCorp shares flutter on bid speculation

Shares of takeover target Potash Corporation of Saskatchewan traded up and down,then up again, on Monday as investors triedtoguessthe outcome of the$38.6-billion US hostile bid for the company.

On the upside, a reportin Britain's Sunday Times citing sources close to the dealsaid Anglo-Australian bidder BHP Billiton might be ready to raise its $130-a-share offer.

The paper's sources said the bid could riseby as much as 10 per cent.

Then the Reuters news service reported Monday from Melbourne that a person close to the deal said BHP would not raise its offer before Nov. 3, when the Canadian government is expected to decide whetherto blockBHP.

A spokeswoman for BHP told The Canadian Press that the company had no immediate comment on the Times report.

In trading on the Toronto Stock Exchange, PotashCorp shares fell $1.50, regained the loss and added more than $1.50, and finally slipped again.Thestock finished the day up $1.20 at $148.70.

PotashCorp has said the BHP bid is too low, but on top of the conflicting news about a possible higher bid, PotashCorp investors have to deal with political uncertainty.

While the federal government routinely approves foreign investments, Saskatchewan and other provinces are opposed to the BHP bid.

The governing Conservatives must choose between the benefits of remaining open to foreigninvestors and the potential backlash if itapproves a takeover. All but one of Saskatchewan's 14 MPs are Conservatives, and Saskatchewan Premier Brad Wall is a strong supporter of the government.

Meanwhile, analysts are suggesting that PotashCorp stock is worth more than the bid and the current price, based on the outlook for fertilizer. Potash is a fertilizer component.

Brian MacArthur, an analyst with UBS, saysthe shares couldhit $175 US.

"Given the improved fertilizer market, we believe the shares would be trading about $130 per share in the absence of a bid," he said ina note to clients Monday.

Credit Agricole Securities analyst Mark Connelly is looking for a $170-a-share price target because potash markets are tight and"producers have the upper hand."

Scotia Capital has estimated PotashCorp shares could be worth $142 without a takeover.

Ottawa considers BHP bid

Thefederal government has to assess whether the deal is of "net benefit" to Canada. It has set a Wednesday deadline for revealingits decision.

If Ottawa approves the acquisition, BHPcould ask PotashCorp shareholders to vote on its offer, ortry towin the company's support with a higher bid.

PotashCorp disclosed recentlyit had spoken to 15potential bidders about making a competingoffer for the company.

"The PotashCorp board believes that there is a real and substantial probability that alternatives to the BHP offer will emerge that will increase shareholder choice and enhance shareholder value," the company said.