Potash Corp of Saskatchewan, the world’s largest fertilizer maker, filed a lawsuit on Wednesday in an effort to block a hostile US$38.6 billion takeover offer from mining company BHP Billiton.
In its request for an injunction against the takeover, Potash claimed that BHP’s offer was “built upon false and misleading statements and omissions” as well as BHP’s “manipulation of the perceived value” of the firm’s shares.
The management of Potash has opposed the BHP offer, arguing that it significantly undervalues its shares. Potash executives have said that they expect another bidder to materialize, although none has appeared.
The aggressive legal action by the company against BHP will probably increase pressure from shareholders for an alternative, higher bid. While there have been indications that state-owned chemical companies and investment funds in China might make an offer, the governments of Saskatchewan and Canada appear cool to the idea of turning over control of the province’s natural resources to China, which is the world’s largest potash importer.
Still, two people with direct knowledge of the matter said that Sinochem (中國中化), the state-run parent of the largest fertilizer distributor in China, had hired Deutsche Bank and Citigroup to advise it on a possible acquisition of a stake in Potash.
Ruban Yogarajah, a spokesman for BHP, said that the lawsuit was without merit.
“This lawsuit seems to be their answer to the absence of another bidder,” he said.
On Monday, BHP extended its deadline for Potash shareholders to accept its offer by one month after Canadian regulators requested more information.
Although Potash is based in Saskatoon, Saskatchewan, the lawsuit was filed with the US District Court for the Northern District of Illinois. William Doyle, the president and chief executive of Potash, lives near Chicago and maintains an office in Northbrook.
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