BHP Billiton does not have its takeover of PotashCorp in the bag even if it succeeds later on Wednesday in receiving government consent, with its $39bn bid viewed by many analysts as too low, and reports of a rival suitor.

Canada's government is due by midnight local time (04:00 GMT on Thursday), to reveal whether it is to block the Australian mining giant's bid for PotashCorp, as officials in the potash group's home province of Saskatchewan have urged.

The deal must pass tests, including providing a "net benefit" to Canada, as laid down by the Investment Canada Act, which was invoked in May 2008 to block the $1.3bn takeover of MDA's satellite division by US defence group Alliant Techsystems.

However, even if, as is expected, Canada gives conditional approval to BHP, the mining group still faces the task of convincing PotashCorp investors that its deal is worth accepting, analysts said.

Russian rival? 

This process has been muddied by reports that Phosagro, a privately-held Russian fertilizer group, is planning a rival offer, potentially igniting a bidding war.

Vladimir Litvinenko, the Phosagro chairman, has asked for support from Vladimir Putin, Russia's prime minister, including pressure on banks to finance the deal, according to business newspaper Vedomosti.

The deal may require support too from Russian potash giants Silvinit and Uralkali, to form a $25bn-30bn bidder,  and make the "remote potential to make a bid for PotashCorp appear", according to Troika Dialog analyst Mikhail Stiskin.

PotashCorp vs Mosaic

Even if a Russian bid - which would leave the country in control of about two-thirds of world potash trade - foundered, BHP may be forced to lift its offer to win approval from PotashCorp shareholders, given the rise in valuations of other fertilizer groups.

PotashCorp shares, while initially lifted by more than 30% by BHP's bid, have actually underperformed those of peers such as Agrium and Mosaic since BHP's interest was unveiled in August, with the revival in world potash sales whetting investor appetite for the sector.

Germany's K+S on Tuesday lifted its profits target, citing the potash market's accelerating rebound.

The sector's performance implies that PotashCorp shares would have far exceeded BHP's offer of $130 apiece even without a bid.

BHP sweetener? 

National Bank analyst John Chu said that extrapolating from the 33% jump in other fertilizer group shares since August suggested an "unaffected" PotashCorp stock price of $140-143.

UBS analysts, saying they belied PotashCorp's share prices was "being impacted" by BHP's bid, calculated that the mining group could justify raising its bid to $165 a share, factoring in the bank's forecast of a potash price of $460 and an 8% discount rate.

This would still leave the bid below the $170 level at which BHP would be required to seek shareholder approval for the acquisition, under UK laws which enforce investor votes if the size of the target company exceeds profits, asset or turnover thresholds when compared with the size of the suitor.