Potash Corp. of Saskatchewan Inc. said it has been approached by third parties the past week following BHP Billiton Ltd.’s unsolicited $38.6 billion takeover bid as it formally recommended its shareholders not tender shares in support of BHP’s offer.
The board of world’s largest fertilizer maker by capacity rejected BHP’s approach, made privately, which prompted BHP to take the offer directly to Potash’s shareholders.
Potash Corp. is the world’s largest producer of potash, the most valuable of the three core components of fertilizer because of limited supplies–it is mined in only 12 countries. The company ranks third in phosphate and nitrogen-based products.
Tight global food supplies and a recovery in demand are fueling merger activity in the agribusiness sector. Large diversified mining groups such as BHP have eyed a move into potash to leverage their production skills and access long-term growth in the food sector, especially from emerging markets.
Potash on Monday again called BHP’s $130 a share offer “inadequate,” saying it fails to recognize the company’s growth prospects. Besides receiving interest from others, Potash said it too has initiated contact with “a number of third parties who have expressed an interest in considering alternative transactions.”
The Wall Street Journal earlier Monday reported a consortium led by Chinese private-equity fund Hopu Investment Management Co. is studying the feasibility of a bid for Potash, citing a person familiar with the situation. That person said the group is made up of investors from Canada, the U.S. and Asia, and includes at least two sovereign wealth funds, the knowledgeable person said. No decision has been finalized yet on whether to proceed with a bid for the Canadian fertilizer maker, the person added.
A BHP spokesman wasn’t immediately available for comment.
