Potash Corp. Says BHP Has Been Cold-Calling Customers
Potash Corp. Says BHP Has Been Cold-Calling Customers
Daniel Acker/Bloomberg
Potash Corp. Chief Executive Officer Bill Doyle rejected this month’s $130-a-share bid from BHP, the world’s largest mining company, and is seeking other offers.
Potash Corp. Chief Executive Officer Bill Doyle rejected this month’s $130-a-share bid from BHP, the world’s largest mining company, and is seeking other offers. Photographer: Daniel Acker/Bloomberg
Potash Corp. of Saskatchewan Inc. said BHP Billiton Ltd. has been cold-calling some of its customers in bid to “undermine” the world’s biggest fertilizer maker as part of a $40 billion hostile takeover bid.
“We can only assume that BHP Billiton’s purpose is to sow seeds of doubt and confusion about the future of Potash Corp.,” the Canadian company said yesterday in a letter to customers, lodged in a regulatory filing. “We consider this contact to be inappropriate and highly unethical.” BHP spokeswoman Fiona Martin said she wasn’t immediately able to comment.
Potash Corp. Chief Executive Officer Bill Doyle rejected this month’s $130-a-share bid from BHP, the world’s largest mining company, and is seeking other offers. BHP wants to make the acquisition to diversify sales and benefit from surging demand for fertilizer as food needs grow.
“It’s a move by BHP to try and get some action happening,” Peter Rudd, director of mining and resources at Balnave Capital Group, said in Melbourne. “It would be a coordinated action and one of a number they’d be adopting, including presumably talking to major shareholders. This is a sign that BHP are serious.”
BHP declined 2.2 percent to A$37.05 at the 4:10 p.m. Sydney time close on the Australian stock exchange. Melbourne-based BHP could afford to pay as much as $180 a share for the Saskatoon, Saskatchewan-based fertilizer producer, Morgan Stanley said.
‘Undermine Efforts’
“We are disappointed that BHP would attempt to undermine our efforts to serve you,” Potash Corp. said in the letter dated Aug. 30 and signed by Stephen Dowdle. In a PRN newswire release on May 26 this year, Stephen F. Dowdle was named as president of PCS sales at Potash Corp.
BHP’s Chris Ryder, director of potash marketing, has begun calling customers, Potash Corp. said in the letter. BHP is studying development its own Jansen potash mine in Canada that may produce 8 million metric tons a year when it starts output.
“The purpose of BHP Billiton’s call clearly was not to solicit your potash order from BHP Billiton’s Jansen project - a multi-year greenfield project which BHP is not even proposing to take to its own board of directors for approval until 2011,” Potash Corp. said.
Takeover Obstacle
BHP’s takeover bid may face an obstacle in the shape of Canpotex Ltd., the pricing and marketing cartel created by Potash Corp., Mosaic Co. and Agrium Inc. almost 40 years ago, the Financial Times reported Aug. 27. This stance may help Potash Corp. in its campaign to persuade Canadian regulators and politicians to block the bid under the Investment Canada Act, the newspaper said.
BHP will only “transform” Canpotex if that’s what other shareholders want, Chief Executive Officer Marius Kloppers said last week in London. BHP said earlier this month it would ultimately seek to market its potash independently of Canpotex should its bid succeed.
Canpotex is the marketing arm of potash producers in Saskatchewan and accounts for as much as 40 percent of global trade in the crop nutrient, according to BMO Capital Markets.
To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net
Rate These Stories
Rate this Page