You are right. I didn't have my facts straight... thanks for the correction. So yeah, BHP was bidding, as was a Chinese company. The BHP bid was scuttled, and it seems Chinese offer went down with it. As for why the execs liked the deal, it's because they would have been greatly enriched by the sale.
Quoth the CBC, in an editorial (http://www.cbc.ca/canada/story/2010/10/01/f-vp-newman.html):
The executives at Potash Corp., who will benefit from a huge payout if the company is sold, are reportedly trying to organize a rival bid involving a Chinese government-owned company to drive up the sale price.
But ultimate ownership by a company from China, which is one of the biggest buyers of Saskatchewan potash, would have even greater implications for the value of the product than a sale to BHP Billiton.
So, regardless of who makes the stronger bid, the answer from both Ottawa and Saskatchewan should be the same: "Sorry. No sale."