BHPB launches hostile cash offer for PotashCorp at US$130/share

Finance

BHP Billiton, publicly rebuffed by the board of Potash Corporation of Saskatchewan on Tuesday, has launched a hostile cash offer for the company for the same price as proposed in friendly discussions with the fertilizer giant.

Jac Nasser, BHPB’s chairman said “We firmly believe that PotashCorp shareholders will find the certainty of a cash offer, at a premium of 32% to the 30-trading day period average, very attractive and we have therefore decided to make this Offer directly to those shareholders”.

Shares in the fertilizer producer close at US$143.17/share in New York on Tuesday evening.

BHPB says its offer gives PotashCorp an equity value of US$40 billion. The world’s largest miner by value estimates the total amount of funds required to consummate the offer is approximately US$43 billion, including funds to refinance certain PotashCorp debt if necessary. A facility has already been secured with banks.

As part of its rebuttle and defence on Tuesday, the PotashCorp board also initiated a shareholder rights plan, or ‘poison pill’ that would trigger once an entity or individual reached 20%.

BHPB says its offer is conditional on plus-50% acceptance from shareholders and the termination of the rights plan, or it being deemed ineffective. The offer is not subject to any financing condition or BHP Billiton shareholder approval.

Last year PotashCorp produced 11% of global potash production and it owned one-fifth of global potash capacity.