[miningmx.com] — CANADIAN fertiliser company Potash Corporation of Saskatchewan has filed legal documents against resource giant BHP BILLITON PLC(BHP).
Potash filed a complaint with a US District Court on grounds that BHP had violated federal securities laws and should therefore be prohibited from proceeding with its $39bn hostile bid for its company.
Rejected by the Potash board, BHP last month took its $130-a-share cash offer directly to the Canadian company’s shareholders.
Potash’s legal documents ask the court to stop BHP from proceeding with “its attempt to wrest majority control from Potash Corp shareholders in a coercive $40 billion hostile tender offer – an offer built upon false and misleading statements”.
It said BHP was trying to convince shareholders of the merits of its offer without providing background of the offer, disclosing the conditions and uncertainties inherent in that offer, and its plans for the company’s business if it acquires control.
Potash cites the conversation had between its CEO Bill Doyle and BHP CEO Marius Kloppers when they met mid August when BHP first presented its offer to the company.
It was quoted as saying that BHP had been studying Potash since 2001 and more intensively since 2005. It also quoted him as saying “there is only a short window” to get a deal done.
According to the documents, Kloppers admitted to Doyle that he had “choked on the [Potash Corp] share price more than a couple of times.”
“BHP found a way to try to get past that choke-point – by driving down the price of Potash Corp stock,” Potash said.
One analyst suggested that BHP Billiton was trying to pick up the stock at perhaps $80 or $90 a share.
“BHP has also sought to increase its chances of acquiring Potash Corp on the cheap by making its offer in an unusually coercive form,” said Potash.
It said unlike a typical tender offer, BHP had not conditioned its offer on obtaining sufficient shares to enable it to effect a merger.
Instead of the 66.75% required under Canadian law, BHP’s offer will be
consummated if the resources giant is able to acquire just over 50% of the
outstanding shares.
Potash also said BHP had also “made false and misleading statements” regarding its plans for how it will run the company if it acquires control.
It said the resources giant was vague about whether it would develop its Jansen greenfield project, whether it will participate in the Canpotex joint export venture, and whether it will sell Potash Corp’s nitrogen and phosphates businesses.
“As a result of BHP’s misleading statements, PCS shareholders have received false and conflicting information about BHP’s offer and Potash Corp’s prospects and true value,” said the potash producer.
It added that since BHP’s offer became public, Potash Corp’s shares have traded in a range of US$145 to US$150 per share – well above BHP’s offer price.
It said the fact that its share price rose to 13% over the BHP offer price after one day and by almost 15% one week later, reflects that the offer is inadequate.
On Tuesday BHP Billiton extended the deadline for Potash Corp shareholders to tender their shares by almost a month to November 18. This was after a request from Canadian competition authorities for more information on its offer.
