POT shares up $27 this morning to $144 some $14 above the bid price.
If successful a huge Canadian icon will be swallowed by an even larger international mining juggernaut.
Coulda had POT for $90 a couple of months ago.
Ha ha ha.....that's the old hindsight for you.
If successful a huge Canadian icon will be swallowed by an even larger international mining juggernaut.
Coulda had POT for $90 a couple of months ago.
Ha ha ha.....that's the old hindsight for you.
Potash Corp. rejects hostile BHP bid
Boyd Erman, Brenda Bouw and Tim Kiladze
06:26 EST Tuesday, Aug 17, 2010
Toronto/Vancouver — Potash Corp. of Saskatchewan has received – and already rejected – a blockbuster $38.6-billion (U.S.) takeover bid from BHP Billiton.
BHP has offered $130 a share for Potash Corp., the world’s biggest fertilizer company, which slammed the price Tuesday as “grossly inadequate” and added that it “is not in the best interests of its shareholders for Potash Corp. to enter into discussions with BHP Billiton.”
“We believe it is critical for our shareholders to be aware of this aggressive attempt to acquire their company for significantly less than its intrinsic value,” Potash Corp. chairman Dallas Howe said in a statement. “The fertilizer industry is emerging from the recent global economic downturn, and we feel strongly that Potash Corp. shareholders should benefit from the current and potential value of the company. We believe the BHP Billiton proposal is an opportunistic effort to transfer that value to its own shareholders.”
Potash audio feed
Listen to the Potash Corp. conference call
Download (.mp3)
Potash Corp. shares closed Monday at $112.15 in New York, where they trade most heavily. The $130-a-share price is about a 16 per cent premium to that closing price, and almost matches the company's 52-week high.
The shares fetched more than $200 during the commodity-stock boom of 2008.
News of BHP's bid pushed up the Canadian dollar by 0.5 per cent to 96.29 cents U.S., highlighting to markets the “potential for large Canadian takeovers” that would require Canadian currency, said Scotia Capital currency strategist Camilla Sutton.
BHP set its sights on the potash business more than four years ago, when it began to work its way into the industry.
BHP has been growing by acquisition in Potash Corp.'s back yard, buying smaller players like Anglo Potash Ltd. and Athabasca Potash to get land to explore for the mineral.
Potash Corp. is in a much different league – the world's biggest potash producer, with seven potash mines. The company also has facilities producing nitrogen and phosphates, enabling Potash Corp. to bill itself as the world's biggest fertilizer company by capacity.
Potash Corp. Bill Doyle said on a conference call Tuesday that the bid was made on Aug. 12, and the company decided to tell shareholders about the “aggressive attempt” to buy the company “for significantly less than its intrinsic value.”
To see a copy of the approach letter from BHP click here
Mr. Doyle noted that this value comes from three keys factors: there are only two major potash producers in the world, the industry has high barriers to entry, and there are no product substitutes.
Calling the company a “uniquely valuable asset,” Mr. Doyle said his company is in an “enviable position, and we have taken steps to become even stronger.”
He also pointed to Agrium Inc.’s $1.2-billion offer for Australian’s AWB Ltd. earlier this week as proof of the merger opportunities seen in the industry, which is coming out of a severe slump from the recession.
“We believe the timing of the BHP proposal is highly opportunistic and is an ill-disguised attempt to exploit an anomaly” in the company’s stock price, which Mr. Doyle says doesn’t reflect the company’s true value as potash prices continue to rise.
Moreover, he believes Potash Corp. is set to grow. “Following the global downturn we believe we are on the verge of an inflexion point.” Global potash consumption hit a near term low of 30 million tonnes in 2009, but the company expects that number to hit 50 million this year, with even more growth in 2011.
When asked on the conference call what it would take for them to talk to BHP, Mr. Doyle said: “We won’t speculate on a price. We are simply looking after the best interest of our shareholders.”
However, he added that Potash Corp. did not try to consult with BHP after receiving the offer because the bid price was so low that it “was not a constructive basis for negotiation.”
He also noted that any deal would have to include talks with legislators. “I really can’t speak to what the government might or might not do,” he said.
Mr. Doyle said he thinks the BHP’s decision to boost spending in its Jansen project in Saskatchewan has been a “smokescreen” to get to this point.
“We clearly saw through it and we think now our shareholders will see through it as well,” Mr. Doyle said. Earlier this year, BHP announced a $240-million investment in Jansen, its existing Saskatchewan potash project.
When asked why they disclosed the deal, Mr. Doyle said he thought it was critical to tell shareholders about BHP’s “aggressive attempt” to buy the company at what they think is much less than it’s worth.
Mr. Doyle also wanted shareholders to see how small the 16 per cent premium is relative to the giant payouts paid for other Canadian resources players, such as the Falconbridge Ltd. and Inco Ltd.
“I am not saying we are opposed to a sale, but I am saying we are opposed to a steal of the company,” Mr. Doyle said.
“BHP is attempting to transfer the value inherent in Potash Corp. to its shareholders at the expense of our own shareholders,” Mr. Doyle said.
“We believe that BHP intentionally launched its proposal just as the fertilizer industry is emerging from an unprecedented demand decline associated with the severe global downturn, in order to seize the value that Potash Corp. is poised to create.”
