BHP Billiton goes hostile for Canada’s Potash Corp acquisition

BHP Billiton, the world's largest mining company and a recent entrant into the potash business, today went hostile in its bid to take over Potash Corporation of Saskatchewan (PotashCorp), the world's largest fertiliser producer.

Melbourne, Australia-based BHP took its $38.6-billion in cash takeover offer directly to shareholders of PotashCorp, after the board of the Canadian company yesterday rejected the offer saying that BHP is aggressively attempting to acquire the company for significantly less than its intrinsic value. (See: Canada's Potash Corp rejects BHP Billiton's $38.6 -bn cash takeover bid)

BHP had offered $130 per common share of PotashCorp, a premium of 16 per cent to the company's share price on 16 August. The offer values the total equity of PotashCorp at approximately $40 billion on a fully-diluted basis.

But as news of the bid emerged, Potash's shares rose to $143.17 on the New York Stock Exchange yesterday at closing, indicating that investors are expecting BHP to raise its bid.

BHP plans to formally commence its offer by way of newspaper advertisement on 20 August 2010. The company said that the offer will be open for acceptance until 11:59 p.m. (EDT) on 19 October 2010, unless the offer is extended at its sole discretion.

While taking its bid directly to PotashCorp's shareholders, BHP's chairman Jac Nasser said, "We firmly believe that PotashCorp shareholders will find the certainty of a cash offer, at a premium of 32 per cent to the 30-trading day period average, very attractive and we have therefore decided to make this offer directly to those shareholders."