CANADA STOCKS-TSX rallies after Potash rejects BHP bid

Tue Aug 17, 2010 10:35am EDT
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*TSX up 73.82 points, or 0.64 percent, to 11,626.58

*Potash Corp soars 23.5 pct after it rejects BHP bid

*Magna jumps after court OKs payout to Magna chairman (Updates to midmorning, adds quote)

By Jennifer Kwan

TORONTO, Aug 17 (Reuters) - Toronto's main stock index rose on Tuesday morning after Potash Corp of Saskatchewan (POT.TO: Quote) rejected an unsolicited $38.6 billion bid for the company, raising the prospect of a higher bid and other takeover activity in the fertilizer sector.

Potash Corp, the world's biggest fertilizer company, said its board rejected BHP Billiton's offer as "grossly inadequate" and its shares shot up 23.5 percent to C$144.74. [ID:nSGE67G0DT].

Fellow fertilizer producer Agrium (AGU.TO: Quote) rose 3.9 percent to C$71.49, helping to boost the index's materials sector by 3.3 percent.

"Generally speaking, in this sort of situation, where there's smoke there's fire," said Bob Gorman, chief portfolio strategist at TD Waterhouse.

"You could have a higher bid come out of BHP or you could have other players enter here with a view to making bids themselves. Or the third possibility is that this sort of activity naturally puts the spotlight on the sector involved."   Continued...