Citigroup (NYSE:C) Says BHP (NYSE:BHP) Deal for Potash (NYSE:POT) May Not Go Forward

Citigroup (NYSE:C) said the $40 billion offer for Potash Corp. of Saskatchewan Inc. (NYSE:POT) by BHP Billiton (NYSE:BHP) is in danger of failing, as the company will probably not be willing to increase its bid, and the possibility of a white knight emerging is highly unlikely, even with all the talk about interests from China.

“The probability of a white knight or of BHP overpaying is low, in our view, hence we see a risk that the deal may not proceed,” the Citigroup analysts wrote in a note.

Marius Kloppers, BHP’s chief executive officer, has been holding firm to the original bid of $130 a share, and has given no indication he would be willing to sweeten the offer.

That would be tested if rumors of a Chinese bid were to become a reality.

Kloppers will meet with Canadian lawmakers on Wednesday talk about the bid after pressure for the transaction to be reviewed.