Fertilizer giant rejects $38.6 billion takeover bid

chart_ws_stock_potashcorporationofsaskatchewaninc.top.png By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- Potash Corporation, the world's largest fertilizer producer, said Tuesday it has received and rejected a $38.56 billion unsolicited takeover bid from BHP Billiton, calling the mining giant's offer "grossly inadequate."

The Saskatoon, Saskatchewan-based company said the $130 per share offer, representing a 16% premium to Monday's closing price, undervalues the company's global operating capacity and potential to capitalize on growing food demand.

However, Bill Doyle, chief executive of Potash, told analysts in a conference call that he is not opposed to selling the company, though he declined to speculate about a price.

"I'm not saying we're opposed to a sale," Doyle said. "But what I am saying is that I'm opposed to a steal of the company."

Shares of Potash (POT) were up 27% to $142.38 in afternoon trading on the New York Stock Exchange. While the stock has regained ground after falling to a low near $85 in July, it remains well below its 2008 highs near $228 a share.

Charles Neivert, an analyst at Dahlman Rose & Co., said BHP will have to raise its offer substantially. "They're going to have to take this up quite a bit," he said, adding that $150 a share would be a minimum.

BHP confirmed in a statement that it has made an offer to buy Potash, adding that it continues to review its options and will make further announcements in due course.

Meanwhile, Potash adopted a shareholder rights plan Tuesday that would allow current shareholders to buy company stock at a "substantial discount" if any investor acquires a stake larger than 20% of outstanding common shares. However, the rights plan does allow an investor to buy a controlling stake of Potash through a bidding process or a negotiated transaction.

The unsolicited bid for Potash comes as the fertilizer industry recovers from the recession and demand for agricultural commodities such as wheat, corn and soybeans has increased sharply. At the same time, grain inventories have fallen to record lows as a severe drought slashed production in Russia and other Black Sea nations.

"Global demand for food is steadily increasing, creating an attractive operating environment for the entire fertilizer industry," Bill Doyle, president and chief executive of PotashCorp, said in a statement.

The takeover bid also boosted shares of other fertilizer companies such as Mosaic Company (MOS, Fortune 500), Agrium Inc. (AGU) and Syngenta (SYT). Shares of BHP (BHP), however, were down more than 2% to $70.42. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.