BHP goes hostile on $39 billion Potash Corp bid

Wed Aug 18, 2010 5:55pm EDT
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By Euan Rocha and Eric Onstad

TORONTO/LONDON (Reuters) - BHP Billiton will pitch its $39 billion offer to buy Potash Corp directly to shareholders of the No.1 fertilizer supplier after arranging a massive bank loan that could help it sweeten its now-hostile bid.

BHP Billiton, already the No. 1 global miner, said on Wednesday it would bypass the board and extend its $130-a-share offer to the Canadian company's shareholders, many of whom remain underwhelmed by the price.

Investors signaled their belief that the offer would go higher by pushing Potash Corp shares up by nearly a third in two days, leaving the stock 13 percent above the bid price.

Potash Corp's directors have rejected the offer and put a poison pill in place to fend off BHP. Even so, the company has left the door open to a higher bid.

"I would say it would have to get to the $160 to $180 range for there to be a potential for a deal," said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc, which owns Potash Corp shares.

"A fair deal is not at $130 a share," he added.

With its takeover offer -- the largest in any industry this year -- BHP aims to vault to the top of a rebounding fertilizer industry, which suffered during the global economic crisis.

The nutrient, critical for boosting crop yields, commanded more than $1,000 a metric ton during the commodity boom of 2007-08. It has since fallen to about $350 to $375 a metric ton levels.   Continued...

<p>A man walks into the head offices of BHP Billiton in central Melbourne July 22, 2009. REUTERS/Mick Tsikas</p>