Potash Corp. Declines on Speculation Canada May Block BHP Takeover Offer

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer company, dropped the most in four months in New York on speculation the Canadian government will block BHP Billiton Ltd.’s $40 billion hostile takeover offer.

Potash Corp. fell $4.79, 3.3 percent to $142.53 at 4:15 p.m. in New York Stock Exchange composite trading, the most since June 29. The government is becoming more skeptical of Melbourne-based BHP’s $130-a-share offer and Industry Minister Tony Clement is being swayed by comments from Saskatchewan Premier Brad Wall, who opposes the offer, the Globe and Mail reported, citing unidentified people.

“The deal uncertainty is weighing on the stock,” Edlain Rodriguez, a New York-based analyst at Gleacher & Co., said in a telephone interview. “That’s going to be the short-term focus.”

Potash Corp., which today reported third-quarter profit that beat analysts’ estimates, has rejected BHP’s bid as too low and said it was seeking alternative proposals. The Canadian government is to decide by Nov. 3 whether to approve or reject the transaction based on a calculation of the transaction’s benefit to the country.

BHP officials are concerned that Canada may ask it to make “extravagant” concessions as part of the takeover, forcing the company to walk away, the Globe and Mail said.

‘No Basis’

“That is not BHP Billiton’s position,” Ruban Yogarajah, a BHP spokesman, said in a telephone interview.

“We have absolute confidence in the integrity of the Investment Canada review process,” Yogarajah said. “We continue to have ongoing negotiations with the investment review division.”

The Globe story has no basis in fact, Lynn Meahan, a spokeswoman for Investment Canada, a division of the Industry Department, said in an e-mailed response to questions.

Potash Corp.’s net income climbed to $402.7 million, or $1.32 a share, from $247.9 million, or 82 cents, a year earlier, the Saskatoon, Saskatchewan-based company said in a statement. Per-share profit topped the $1.16 average estimate of 25 analysts surveyed by Bloomberg.

Potash Corp.’s total sales in the quarter rose 43 percent to $1.58 billion from $1.1 billion, more than the $1.34 billion estimated by 16 analysts surveyed.

‘Committed Bidder’

“BHP remains a serious and committed bidder” for Potash Corp., Paul Galloway, a London-based analyst at Sanford C. Bernstein Ltd., said today in a note to clients. He estimates BHP will have to raise its per-share offer to $156 to complete the transaction.

A group of Saskatchewan native groups, merchant banks, pension funds and foreign investors is trying to complete a counterbid for Potash Corp., the StarPhoenix newspaper said today, citing First Nations spokesmen and without naming the banks and funds.

Ed Stelmach, premier of Alberta, said he supports Saskatchewan’s opposition to the proposed takeover, the StarPhoenix reported. Saskatchewan’s potash resources are “very strategic” to the province and the rest of the country, the newspaper quoted Stelmach as saying.

Potash Corp. boosted its forecast for full-year earnings to $5.75 to $6 a share from a previous prediction of $5 to $5.50. It also projects 2011 profit of $8 to $8.75 a share. Twenty-six analysts surveyed by Bloomberg estimated on average earnings of $7.83 next year.

Potash Sales

The company sold 1.9 million metric tons of potash in the quarter, up from 1.01 million tons a year earlier. That beat the 1.5 million-ton average of three estimates from Horst Hueniken, a Toronto-based analyst at Stifel Nicolaus & Co., and two other analysts.

“The process of replenishing nutrients accelerated quickly and tangibly in the third quarter,” Potash Corp. Chief Executive Officer Bill Doyle said in the statement.

Potash Corp. raised its 2011 global forecast for industrywide potash demand next year to 55 million tons to 60 million tons from a previous prediction of 55 million.

The company’s average selling price for potash fell to $305.60 a ton in the three-month period, from $308.64 in the previous quarter and $389.24 a year earlier.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.

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