Anglo-Australian mining giant BHP Billiton on Wednesday launched a hostile takeover bid for Canada’s Potash Corp, which values the world’s largest fertilizer producer at about US$40 billion dollars.
“BHP Billiton today announced its intention to make an all-cash offer to acquire all of the issued and outstanding common shares of Potash Corporation,” it said in a statement, one day after Potash snubbed an unsolicited approach.
The cash offer is pitched at US$130 per Potash share — the same level as BHP’s approach that Potash rejected on Tuesday, arguing that it substantially undervalued the group.
As a result, BHP chairman Jac Nasser said his company had decided to take its offer directly to Potash investors.
“We firmly believe that Potash Corp shareholders will find the certainty of a cash offer, at a premium of 32 percent to the 30-trading day period average, very attractive and we have therefore decided to make this offer directly to those shareholders,” Nasser said in the statement.
BHP Billiton, based in Australia, is the world’s biggest miner and produces coal and iron for the global steel industry, as well as a host of other metals and commodities along with oil and gas.
Its fortunes have been built on recent years on soaring demand from China’s booming economy but it also has huge interests across the globe.
“The acquisition will accelerate BHP Billiton’s entry into the fertilizer industry and is consistent with the company’s strategy of becoming a leading global miner of potash,” BHP said yesterday. “Potash Corp’s potash mining operations are a natural fit with BHP Billiton’s greenfield land holdings in Saskatchewan, Canada.”
On Tuesday, Potash had slammed BHP’s approach as “grossly inadequate” and outlined a plan to prevent a hostile takeover.
The Canadian firm said it would adopt measures allowing ordinary shareholders to buy more shares cheaply should an outside party build up a single stake in the company of 20 percent or more.
This so-called “poison-pill defense” plan, which requires regulatory approval, would make it much more expensive and difficult for a hostile suitor to buy up an ever increasing amount of shares and win control.
BHP said yesterday that its takeover offer was dependent on the termination of this plan, as well as regulatory approvals.
The group recently paid US$320 million for Athabasca Potash Inc, also based in Saskatchewan, which holds more than half the world’s reserves of potash, the basic ingredient in fertilizer.
“PotashCorp will provide BHP Billiton with an immediate leadership platform in the global fertilizer industry and further diversify BHP Billiton’s portfolio,” the Anglo-Australian miner added.
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