Potash's Doyle `Waiting for Godot' to Trump BHP $40 Billion Bid

Potash Corp. of Saskatchewan Inc. Chief Executive Officer Bill Doyle urged patience for investors expecting an alternative to BHP Billiton Ltd.’s $40 billion bid, two months after starting talks with potential suitors.

“I laugh when I see people presume or assume a certain outcome,” Doyle said in a telephone interview yesterday from Potash Corp.’s offices in Saskatoon, Saskatchewan. “I just say, ‘Please be patient.’” He declined to elaborate.

Potash Corp., the world’s largest fertilizer maker, has been seeking alternatives since rejecting BHP’s offer on Aug. 17. No proposals have been made public.

“It’s like waiting for Godot,” Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne, said today in an interview. “It’s in his best interests to allow investors to think there is going to be another offer. You can’t rule it out but I think it’s a less than 50 percent probability at this stage.”

Doyle says the offer from Melbourne-based BHP is too low amid rising prices for grains and his company’s namesake crop nutrient. The company yesterday reported third-quarter profit that beat analysts’ estimates and raised its full-year earnings forecast.

Potash Corp. is engaged in “very active conversations” about alternatives to BHP’s hostile offer and is pursuing “all options,” Doyle said yesterday.

Value Recognition

Potash Corp. rose $2.56, or 1.8 percent, to $145.09 at 4:15 p.m. in New York Stock Exchange composite trading. BHP, the world’s largest mining company, fell 0.3 percent to 2,213.5 pence in London.

“If you think that only one company in the world can recognize the value of Potash Corporation -- that’s quite a remarkable thought process,” Doyle said. “When you say there’s only a couple of companies, you can’t limit yourself to thinking one way.”

The Canadian government is to decide by Nov. 3 whether to approve the offer based on a calculation of the transaction’s benefit to the country. An alternative bidder may wait until that decision is made, Pengana’s Schroeders said today. His reference to Godot refers to Samuel Beckett’s play “Waiting for Godot” in which the title character never arrives.

Possible Bidders

Sinochem Group, China’s largest fertilizer trader, which had explored taking a majority stake in Potash Corp. according to people familiar with the plan, may struggle to get state financial backing for a takeover, two people with knowledge of the matter said Oct. 7.

Potash Corp. has held talks with 15 potential investors and is continuing to seek alternatives, the company said in a filing dated yesterday with the Saskatchewan Financial Services Commission.

Some Saskatchewan native groups, merchant banks, pension funds and foreign investors are trying to complete a counterbid for Potash Corp., the StarPhoenix newspaper reported yesterday, citing First Nations spokesmen and without naming the banks and funds.

Doyle said in the interview he wouldn’t talk about specific alternative bids.

Potash Corp.’s shares declined yesterday on speculation that Canada may reject BHP’s proposed transaction, said Edlain Rodriguez, a New York-based analyst at Gleacher & Co.

BHP’s Offer

The government is becoming more skeptical of BHP’s 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.

“We have absolute confidence in the integrity of the Investment Canada review process,” Ruban Yogarajah, a BHP spokesman, said in a telephone interview. “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.

Canadian Prime Minister Stephen Harper said yesterday his government would rule “without bias” on the proposed takeover.

The Financial Times cited several unidentified people with connections to the government as saying Canada was leaning toward approving BHP’s offer.

Finance Minister Jim Flaherty told reporters today in Whitby, Ontario, that the federal government has “looked carefully” at the tax implications of BHP’s takeover offer for Potash. He didn’t elaborate.

‘Net Benefit’

Under the Investment Canada Act, the government can block any transaction valued at C$299 million ($294 million) or more if it finds the deal doesn’t provide a “net benefit” to the country, based on factors such as economic activity, employment and productivity.

Potash Corp.’s net income climbed 62 percent to $402.7 million, or $1.32 a share, from $247.9 million, or 82 cents, a year earlier, the company said yesterday in a statement. Per- share profit topped the $1.16 average estimate of 25 analysts surveyed by Bloomberg.

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

To contact the reporters on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net; Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net; Andrew Hobbs at ahobbs4@bloomberg.net.

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