Potash-BHP Battle Nearing Climax
NEW YORK (TheStreet) -- The takeover drama between Potash (POT) and BHP Billiton (BHP) - Get Report could reach a climax this week as BHP reportedly is about to sweeten its bid, Canadian regulators prepare to make important deal-approval decisions, and U.S. judges get set to rule on Potash legal machinations.
It's been a busy week already. On Sunday, the
Times
of London carried an anonymously sourced story indicating that BHP was ready to hike its standing offer for Potash by 10%. That would increase the bid to $143 per share, or about $42.5 billion -- a rather measly figure, all things considered. Potash shares, after all, were trading Monday at $144.03.
>>Potash vs. BHP: The Fertilizer War From A to Z
But BHP quickly denied the report and said its executives were focused only on handling the coming regulatory and legal milestones.
The first and most significant of these comes on Wednesday, when Investment Canada, a body that regulates "non-Canadians who acquire control of an existing Canadian business," is set to announce its decision on whether to give its imprimatur to BHP's proposed deal.
The smart money still appears to be wagering on approval. Canada's minister of industry is on record saying he wants to keep the Great White North open to foreign investment.
But doubt has crept into the matter, after Saskatchewan's government last month made a racket about a BHP deal providing no "net benefit" to the local economy. BHP has tried to ameliorate Saskatchewan with talk of consenting to a higher royalty tax. Despite this, some feel the national government could follow the province's lead.
Then, on Thursday, a U.S. federal court in Chicago will rule on a
lawsuit Potash filed in September
, which asks a judge to block BHP's takeover pursuit on the grounds that the Anglo-Australian miner has fundamentally and illegally misled investors about its bid.
BHP also has to deal with its own shareholders, a few of whom voiced concern to
Reuters
on Monday that a sweetened bid of more than 10% would "destroy value."
The momentum may have swung in Potash's favor in recent weeks, with global crop prices surging and fertilizer demand -- and fertilizer-industry stock prices -- following suit. Many analysts have turned up their criticism of BHP, saying the company horribly mistimed its takeover effort.
As early as the fall of 2009, rumors had flown about BHP's interest in Potash. Had the miner moved earlier, before this summer's crop-price rally, critics say that BHP could have had Potash for a cheaper price.
-- Written by Scott Eden in New York
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