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Potash bid turns spotlight on Wesfarmers' fertiliser unit
Tracy Lee From: The Australian August 20, 2010 12:00AM

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RETAIL sales typically dominate discussions about Wesfarmers, but there is also interest in its less glamorous asset, CSBP.

Comprising the chemicals and fertiliser division of the West Australian conglomerate, CSBP's desirability was underlined this week following BHP Billiton's $43 billion bid for Potash Corp of Saskatchewan.

It's hard to recall a time when there was so much excitement about fertiliser.

In advisory and industry circles, an oft-cited move would be for a player like Incitec Pivot, the country's largest fertiliser and explosives producer, to take CSBP into its stable and thereby give it a footprint on the west coast.

The appeal of the tie-up is not new given Wesfarmers was the underbidder for explosives and chemicals maker Dyno Nobel when it floated in 2006, and before Incitec Pivot later swallowed it up in 2008. (Both fertilisers and explosives require ammonia and ammonium phosphate for their production, which is why the businesses are often a good fit.)

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Orica relishes smorgasbord of opportunity The Australian, 12 Jul 2010
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But while CSBP -- which more than doubled its earnings last financial year to $121 million -- may be a desirable acquisition, it's thought Wesfarmers' asking price of close to $2bn would be too much for Incitec.

In any event Incitec's investors are keener for it to focus on the $935 million project of recommissioning its Moranbah ammonium nitrate facility in central Queensland.

It's more likely an overseas bidder would have the capacity for CSBP. Perhaps Agrium would look west if it fails to snatch AWB from a possible tie-up with GrainCorp, or even as a follow-on deal if it is successful. Other offshore players that turn up on the usual suspects list would probably include CF Industries Holdings, a major rival to Agrium, or Norway's Yara International.

Yet it is questionable whether Wesfarmers would be ready to part with its fertiliser subsidiary given it was one of the first businesses it acquired after the group corporatised from a farming co-operative in the late 1970s.

But it's not just fertiliser that's been coveted within the Wesfarmers stable. About two years ago US-based Genuine Parts Company took a shine to the WA group's industrial distribution and safety business and it is understood an approach was made