BHP Billiton Ltd, seeking to acquire Potash Corp of Saskatchewan Inc for US$40 billion, said the offer is fair and that it would abandon pursuit of the company if it’s not in the best interests of shareholders.
“If the value is not there, we have no trouble walking away from it,” BHP’s chief financial officer Alex Vanselow said on Australian Broadcasting Corp’s Inside Business program broadcast yesterday. “We will be in the potash business with Potash Corp or without.”
BHP made a hostile, US$130-a-share bid for Potash Corp after the Saskatoon-based fertilizer producer rejected an initial approach, calling the offer “grossly inadequate.”
Potash’s board said it is seeking other bidders.
BHP, the world’s largest mining company, could afford to pay as much as US$180 a share, Morgan Stanley said.
“There is only one offer on the table, so why would we compete against ourselves?” Vanselow said, adding the bid is a “fair offer. It’s the only offer, and that’s where we are today.”
BHP’s second-half net income doubled to US$6.59 billion from US$3.26 billion a year earlier, the Melbourne-based company reported on Wednesday. Chief executive officer Marius Kloppers reduced debt by 41 percent and raised the dividend.
It’s an “opportune time to make a bid,” Vanselow said. “Our balance sheet allows us to raise the credit necessary to buy, the valuations match and basically, if you look at the landscape of competitors, they’re not in the same position.”
The company is looking to make acquisitions beyond the bid for Potash Corp, Kloppers said on Thursday. Oil companies operating in the Gulf of Mexico, Brazil and West Africa may be targets for BHP, Goldman Sachs & Partners Australia Pty said in May. BHP is also Australia’s largest oil and gas producer.
Over “the long term, we are very positive about where the world economy is going,” Vanselow said on the ABC program.
The company is cautious on the “short term,” he said.
Australian Treasurer Wayne Swan said yesterday that while the global economy remains uncertain, Australia is in a strong position, with signs that business investment is poised to rise and construction picking up. In the US, unemployment continues to be high and growth has slowed, he said.
“World recovery still has a long way to go,” Swan said in his first economic note since the Aug. 21 election.
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