Potash says BHP hostile bid 'substantially undervalued' firm
The world's top fertilizer-maker Potash Corp said Sunday that Anglo-Australian mining giant BHP Billiton's abandoned takeover bid had "substantially undervalued" the Canadian firm's potential.
"BHP Billiton's decision to withdraw its offer underscores the PotashCorp Board of Directors' unanimous belief that the BHP Billiton offer substantially undervalued PotashCorp and failed to reflect both the value of our premier position in a strategically vital industry and our future growth prospects," it said in a statement.
Earlier, BHP Billiton canceled its multi-billion dollar takeover bid for Potash Corp after it was rejected by Canada, and announced a 4.2 billion US dollar share buy-back.
BHP said promises to boost jobs and investment could not convince Canada's industry minister of the hostile bid's benefits despite being "unparalleled in substance, scope and duration."
Minister of Industry Tony Clement rejected the bid on November 3, but under the terms of the Investment Canada Act (ICA), he gave BHP 30 days to come up with a sweetener.
On Sunday, Clement said BHP "has withdrawn its application for review and informed its shareholders of this decision.
"Under the Act, this terminates the review process, as there is no longer a transaction to review," he added in a statement.
He recognized Billiton's "good faith and integrity throughout this process."
However, Clement also said the ICA "is in place to ensure that major investments in our economy are likely to be of net benefit to Canada... our government recognizes that there may be ways to improve the review process.
"Any changes deemed necessary will be addressed by our government in a responsible and appropriate manner."
Canada's minority conservative government was faced with a tough choice in BHP's move on Potash -- either stick to its faith in unfettered foreign investment in Canada or accept Saskatchewan's protectionist arguments -- the province is home to about a dozen pro-government lawmakers who could lose their seats in upcoming elections.
When BHP's bid was still on the table, Saskatchewan Premier Brad Wall estimated the province could lose three billion US dollars in royalties over 10 years from Potash Corp under BHP's control.
Potash Corp, in its reaction, said it believed "our opportunity for growth in the industry is unmatched and we are excited about the future.
"As the food requirements of our growing global population continue to increase, we believe PotashCorp has the right strategies in place to enhance earnings in the strong market conditions we see unfolding."
The Anglo-Australian company launched a hostile all-cash takeover bid for Potash Corp in August, valuing it at 38.6 billion US dollars, an offer the Canadian firm immediately rejected as "wholly inadequate."
© 2010 AFP