Russian fertilizer company PhosAgro confirmed Thursday earlier reports that it is considering buying a stake in Canada's Potash Corp. of Saskatchewan Inc. (POT), a day after the Canadian government rejected a $38.6 billion hostile bid for Potash Corp. by BHP Billiton Ltd. (BHP).

Industry watchers, however, called the bid a "longshot" and doubted the Russian company will be successful, even as it seeks support for its bid from the Kremlin.

PhosAgro said in an emailed statement that it is "considering taking part in a deal to buy shares in Potash," and is now in "intensive consultations with the Russian government, and Russian and foreign banks."

The privately owned company didn't provide any further comment but said it would tell the market about its further plans after Nov. 15.

A person familiar with the matter told Dow Jones Newswires Wednesday that PhosAgro is trying to create a consortium that will either try to purchase a stake in or propose a merger with Potash, and is seeking the government's support for the deal.

PhosAgro Chairman Vladimir Litvinenko has sent a letter to Russia's Prime Minister Vladimir Putin asking him to support the deal, the person said.

"We are talking about PhosAgro getting a stake in Potash Corp. or merging with it, with a further listing of either PhosAgro or the new company's shares in New York, Toronto and Moscow within 18 months," the person added.

The person said Putin's deputy, Igor Sechin, asked Russia's Economy, Industry and Foreign Ministries, as well as the Federal Security Service, state development bank Vnesheconombank and state-controlled Sberbank (SBER.RS), to consider the matter and report back to him by Nov. 12.

A consortium including PhosAgro, Russian state-controlled banks, Canadian and other international financial institutions, will be formed by Nov. 18 if a decision to proceed is made, the person said. The consortium would need to secure financing of between $12 billion to $15 billion, and there are already preliminary agreements with international banks for loans to finance part of the deal, the person added.

PhosAgro's bid is "a statement of intent from the Russian government that it wants the country's biggest companies, particularly the state companies that are dominant in so-called strategic industries, to become much bigger global players," said Chris Weafer from Russian financial company Uralsib, adding that the bid was "a real longshot" to succeed.

"PhosAgro is considerably smaller than Potash Corp. in terms of sales volumes and is relatively inexperienced in global M&A by global standards," said Citi analyst Daniel Yakub. The Russian company's profit was some 10 billion rubles ($325 million) for 2009 on revenue of RUB57 million, compared with Potash Corp.'s net profit of $988 million on $3.98 billion in sales.

Russia houses two large potash producers--OAO Uralkali (URKA.RS) and Silvinit (SILV.RS)--which are now considering a merger of assets in order to create a national fertilizer champion. The merged company of Uralkali and Silvinit would hold about 30% of global potash reserves and 40% of global exports.

Canada blocked BHP Billiton's hostile bid Wednesday for Potash Corp., saying a sale of the world's largest fertilizer company wouldn't provide a "net benefit" to the country. Yakub said he doubted that PhosAgro would gain control of Potash Corp., given the company's size and the Canadian government's attitude. A possible takeover of Potash Corp. by PhosAgro would "lead to increased control by Russian companies over global potash reserves, and we aren't convinced that the Canadian regulators would be comfortable with that," he said.

-By Alexander Kolyandr, Dow Jones Newswires; +7 495 232 9192; Alexander.Kolyandr@dowjones.com

(Ira Iosebashvili in Moscow contributed to this article.)

-0-