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Potash snubs BHP’s $38.5b takeover bid
NEW YORK — Potash Corp of Saskatchewan Inc said on Tuesday its board has rejected an unsolicited takeover bid from BHP Billiton Ltd worth about $38.49 billion, saying it undervalues the fertiliser producer.
BHP Billiton, an Australian natural resources company, is offering to buy Potash for $130 per share, a 16 per cent premium over Monday’s closing price.
Shares of Potash surged above the offer price in pre-opening trading, indicating that investors expect a higher offer. They rose $32.85, or 29 per cent, to $145.
Potash said its board has adopted a shareholder rights plan, also known as a poison pill, to give the company time to better develop alternatives to enhance shareholder value.
It said the BHP Billiton bid is nonbinding and “opportunistic.”
“The fertiliser industry is emerging from the recent global economic downturn, and we feel strongly that PotashCorp shareholders should benefit from the current and potential value of the company,” Potash said. “Global demand for food is steadily increasing, creating an attractive operating environment for the entire fertiliser industry and, with our premier position, PotashCorp is uniquely poised to benefit.”
Potash consumption has been growing over the past decade because of greater demand for fertiliser from developing nations.
Potash is any of several compounds containing potassium, used chiefly in fertilisers. Its main markets are China, the US, Brazil and India.
Last month the Canadian company reported its second-quarter net income more than doubled to $472 million, or $1.55 per share, as revenue surged 68 per cent to $1.44 billion.
BHP Billiton confirmed it made an approach to Potash. In a statement, it said Potash’s board has not yet agreed to engage in discussions. BHP said it continues to review its options. —
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