Potash Corp. CEO Says BHP Billiton `Will Not Be the Only Bidder'
Bill Doyle CEO of Potash Corp. of Saskatchewan
Daniel Acker/Bloomberg
Bill Doyle, president and chief executive officer of Potash Corp. of Saskatchewan Inc.
Bill Doyle, president and chief executive officer of Potash Corp. of Saskatchewan Inc. Photographer: Daniel Acker/Bloomberg
Potash Corp. of Saskatchewan Inc. Chief Executive Officer Bill Doyle said BHP Billiton Ltd. is unlikely to be the only bidder for the world’s biggest fertilizer producer as others are interested.
“A number of third parties have already expressed interest in alternative transactions, some who we approached and others who initiated contact on their own,” he said in a video clip on the website of the Saskatoon, Saskatchewan-based company.
Doyle last month rejected BHP’s $130-a-share bid as inadequate, as he forecast a 10 percent gain in consumption of the crop nutrient and pointed to price gains of as much as 40 percent in corn, soybeans and wheat since June. China’s Sinochem Group approached Singapore’s Temasek Holdings Pte. to join a group that may bid for Potash Corp., Reuters reported yesterday, citing unidentified people.
“If there’s another bid, it may mean BHP thinks they have to up their bid and that won’t please its investors at all,” said Michael Heffernan, a client adviser with Austock Securities Ltd. in Melbourne.
Potash Corp. rose 0.5 percent to $150.27 by 12:38 p.m. in New York Stock Exchange composite trading. The shares advanced to a high this year of $153.29 on Aug. 23, about a week after Potash Corp. made public BHP’s proposal.
Shares of Melbourne-based BHP Billiton, the world’s biggest mining company, declined 1.4 percent to 1,890 pence by the 4:35 p.m. close in London. They dropped 1.4 percent to close at A$37.91 in Sydney trading.
BHP Shareholders
Li Qiang, head of the president’s office at state-owned Sinochem, didn’t answer calls in Beijing. Jeffrey Fang, a spokesman at Temasek, Singapore’s state-owned investment company, declined to comment.
“We anticipate the process will be more like a marathon than a sprint,” Doyle said in the video, citing the “significant time” involved in previous sales of “other large, Canadian resource” companies.
Any bid by Sinochem or state-owned companies would have to overcome objections from the Saskatchewan government, which said such an offer won’t be in the interest of the province. A state- owned company may lower potash prices, hurting taxpayers, the province’s Energy and Resources Minister Bill Boyd said Sept. 2.
“Buying Potash Corp. in Canada can help China secure the long-term supply of potash even if doesn’t help much in lowering prices,” Li Linna, an industry analyst at Distribution Productivity Promotion Center of China Commerce, a researcher, said by phone from Beijing.
Prefer Buybacks
BHP shareholders would prefer the company to spend money investing in its own mines, on buybacks or dividends ahead of acquisitions, according to 64 percent of the respondents to a Bloomberg News survey of investors. If BHP Chief Executive Officer Marius Kloppers does proceed, he shouldn’t raise the hostile bid by more than 12 percent, according to the survey of 14 shareholders, who manage at least $115 billion in total.
“They are paying a full price,” James Bruce, fund manager at Perpetual Investments which manages the equivalent of $25 billion, including BHP shares, said by phone from Sydney. “M&A should always be measured versus the value accretion of buying back your stock. Versus Potash Corp., I’d prefer them to buy back” BHP shares.
To contact the reporters on this story: Jesse Riseborough in London at jriseborough@bloomberg.net; Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net
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