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Potash Rejects $38.5B Bid From BHP Billiton

Potash Corp. of Saskatchewan rejected an unsolicited takeover offer from BHP Billiton for $130 a share.

Updated from 6:47 a.m. EDT



) --

Potash Corp. of Saskatchewan


said Tuesday it rejected an unsolicited takeover offer from

BHP Billiton

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for $130 a share.

Potash shares closed Monday at $112.15. The shares rose to $140 in premarket trading Tuesday.

The offer is valued at about $38.5 billion.

Potash, in a statement Tuesday, called the BHP Billiton offer "grossly inadequate."

Potash, the world's No. 1 potash producer, also said in a separate press release it adopted a shareholder rights plan to give it "sufficient time to explore and develop alternatives to enhance shareholder value, including competing transactions that might emerge."

"The PotashCorp Board of Directors unanimously believes that the BHP Billiton proposal substantially undervalues PotashCorp and fails to reflect both the value of our premier position in a strategically vital industry and our unparalleled future growth prospects," said Potash Chairman Dallas J. Howe in a statement. "After careful consideration, and in the interest of transparency, our Board determined to proactively disclose BHP Billiton's unsolicited, non-binding proposal to our shareholders.

"We believe it is critical for our shareholders to be aware of this aggressive attempt to acquire their company for significantly less than its intrinsic value. The fertilizer industry is emerging from the recent global economic downturn, and we feel strongly that PotashCorp shareholders should benefit from the current and potential value of the company. We believe the BHP Billiton proposal is an opportunistic effort to transfer that value to its own shareholders."

-- Reported by Joseph Woelfel in New York.

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