The Conversation (0)
BHP Billiton’s CEO Marius Kloppers came to Canada knowing that he would have to impress the local politicians in order to keep his bid for Potash Corp alive. On Monday, Saskatchewan premier Brad Wall left a meeting with Kloppers saying he didn’t see how the buyout would benefit his province or Canada, citing BHP’s reluctance to commit to Canpotex.
By Leia Michele Toovey- Exclusive to Potash Investing News
Saskatchewan premier Brad Wall was not buying it. On Monday, Brad Wall left a meeting with Kloppers saying he didn’t see how the buyout would benefit his province or Canada, citing BHP’s reluctance to commit to Canpotex. He also added that under the current fee structure, the province benefits most from higher prices, rather than increased production.
Impressing the Canadians is an important hurdle BHP has to clear before a bid can be approved. Under the Investment Canada Act, large foreign takeovers must be reviewed by the federal government and shown to provide a “net benefit” to Canada. Prime Minister Stephen Harper has said he will consider Wall’s concerns in reviewing BHP’s bid.
Meanwhile, Potash Corp’s attempt to block BHP’s hostile takeover bid will play out in court on November 4 after a US Federal Court judge granted Potash Corp access to BHP documents. Judge David Coar on Monday ordered a hearing on Potash’s request for a preliminary injunction to block BHP from proceeding with its tender offer to be heard on November 4, before the November 18 bid deadline.
As for an investment firm with positions in both BHP and Potash Corp- they believe that BHP has the financial means to increase their position; a move they will have to take if they hope for a successful bid. Asset management firm First State Investments won’t tender its Potash Corp. of Saskatchewan Inc. shares at BHP Billiton Ltd. offer price of $130-a-share, the co-manager of the firm’s global agribusiness fund said Wednesday. When asked whether First State would tender is Potash Corp. shares at the current offer price, Skye MacPherson said “certainly not.” MacPherson said it wouldn’t make sense to tender the fund’s Potash shares at $130 each when Potash Corp.’s shares are trading around $146. Analysts have said BHP could raise its offer to $180 a share after which the deal would become dilutive to the mining titan on a near-term basis, she noted. $180 a share “is something that BHP could afford,” MacPherson added.
According to inside sources, Potash Corporation can still expect a bid from Sinochem as a means to guard against a hostile takeover by BHP. Sources say China’s state-owned Sinochem could bid for the potash company, possibly partnering with its wealth fund CIC or Singapore’s Temasek, in a deal worth almost $40 billion. Chinese authorities chose Sinochem as the country’s potential bidder and is allowing the Beijing-based company to begin piecing together an offer that would probably involve taking a majority stake in Potash Corp. Sinochem would prefer to involve Canadian pension funds or other Canadian investors to create more support for a rival offer, they said.
Mining giant Rio Tinto (ASX:RIO) has squashed reports it was eying a stake in potash producer Uralkali on Tuesday, setting the stage for the Russian miner to create a domestic potash giant with Silvinit. Investors friendly to Uralkali owner Suleiman Kerimov bought stakes in rival Silvinit in August, crating the possibility for a merger of the two miners. Analysts said a domestic merger is likely to be completed before 2011. Together, the two companies would control up to 45 percent of the global potash export market with partner Belaruskali.
Company News
Allana Potash Corp. (TSXV: AAA) welcomes Mr. Richard J. Lacroix, P. Eng. as a new member of the company’s board of directors. Mr. Lacroix, now retired, is the former Sr. Vice-President, Technical Services for Potash Corporation of Saskatchewan and spent almost 30 years with Potash Corp. Mr. Lacroix has had a long and prominent career in the potash business with Potash Corp., joining the company in 1977 as Project Manager of the company’s Rocanville expansion. Mr. Lacroix rose steadily through management positions in Potash Corp. and became Sr. Vice President of Technical Services in 1987 and headed the team responsible for the corporation’s Research and Development work and major capital expansions. In 1991, Mr. Lacroix became Executive Vice President of PCS Sales, responsible for Canadian Potash Sales, Industrial Sales, and Transportation & Distribution. Mr. Lacroix replaces Mr. Rene Bharti, who has tendered his resignation as a Director.