Listed: TSX, NYSE
SASKATOON, Aug. 17 /CNW/ - Potash Corporation of Saskatchewan Inc.
("PotashCorp") today announced that its Board of Directors has received
and unanimously rejected an unsolicited proposal from BHP Billiton
Limited (ASX: BHP; LSE: BLT; NYSE: BHP) ("BHP Billiton") to enter into a
transaction under which BHP Billiton would acquire PotashCorp for US$130
per share in cash. PotashCorp's Board of Directors thoroughly reviewed
BHP Billiton's unsolicited proposal with the assistance of its
independent financial and legal advisors and concluded that the proposal
is grossly inadequate and it is not in the best interests of its
shareholders for PotashCorp to enter into discussions with BHP Billiton.
"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 PotashCorp
Chairman Dallas J. Howe. "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."
PotashCorp President and Chief Executive Officer Bill Doyle commented,
"Global demand for food is steadily increasing, creating an attractive
operating environment for the entire fertilizer industry and, with our
premier position, PotashCorp is uniquely poised to benefit. We believe
our Board and management team are successfully executing our business
plan and producing strong results. With our unmatched asset base and
proven strategies, we believe we are well positioned to exceed the
expectations of customers around the world and deliver compelling value
to our shareholders."
In making its determination, the PotashCorp Board of Directors
considered a number of factors including:
The BHP Billiton Proposal Fails to Reflect PotashCorp's
Prospects for Continued Growth and Shareholder Value Creation:
PotashCorp is poised to deliver strong earnings growth as agricultural
fundamentals continue to strengthen, global demand for its products -
especially potash - increases, and its strategic investments in new
potash capacity uniquely position it to capture a disproportionate
share of demand growth. The Company firmly believes it is on the verge
of an inflection point, where potash demand will return to historical
trend-line growth, supply will tighten, and pricing will improve. The
powerful long-term drivers of the fertilizer business - population
growth and improving diets in developing nations - changed little as a
result of the global downturn, and the catalysts expected to fuel
near- and medium-term demand are accelerating. A rising demand for
food - coupled with historically low global grain inventories -
support a powerful period of growth for agriculture. The PotashCorp
Board believes that no other company is better positioned to
capitalize on these growth opportunities. The Board is confident that
PotashCorp can deliver significantly greater value to its shareholders
than BHP Billiton's inadequate proposal.
PotashCorp is a Uniquely Valuable Asset: PotashCorp is
uniquely positioned as the premier global producer with unparalleled
potash assets in an industry characterized by substantial barriers to
entry, few producers and no known product substitutes. The BHP
Billiton proposal fails to adequately compensate PotashCorp
shareholders for this strategic position and scarcity value. In
addition, the BHP Billiton proposal does not reflect PotashCorp's
substantial recent and ongoing investments to increase capacity, the
value of PotashCorp's strategic equity investments in China, Chile,
Jordan and Israel, and its unmatched ability to meet the needs of
North American customers and growing offshore potash markets.
The BHP Billiton Proposal Represents a Wholly Inadequate Premium
For Control: At US$130 per share, BHP Billiton is proposing a
premium of only 16% over PotashCorp's August 16, 2010 closing stock
price. This low premium does not reflect the strategic importance,
scarcity value and quality of PotashCorp's assets, or the unique
opportunity PotashCorp affords to BHP Billiton or any other acquiror.
Furthermore, the premium offered is substantially inferior even to
average control premiums globally and in Canada.
The BHP Billiton Proposal is Timed to Deprive PotashCorp
Shareholders of Full Value: BHP Billiton is opportunistically
attempting to transfer the upside value in PotashCorp to its own
shareholders at the expense of PotashCorp shareholders. PotashCorp
believes the timing of the BHP Billiton proposal is highly
opportunistic and an ill-disguised attempt to exploit an anomaly in
the equity market valuation of PotashCorp. PotashCorp believes that
BHP Billiton intentionally launched its proposal just as the
fertilizer industry emerges from an unprecedented demand decline
associated with the global downturn in order to seize the value that
PotashCorp is poised to create. The Company is confident that, given
the demand growth and margin potential anticipated in the months and
years ahead, the continued execution of PotashCorp's strategic plan
would deliver substantially more value to PotashCorp shareholders than
the BHP Billiton proposal.
The Board of Directors communicated its response to BHP Billiton in a
letter sent to its Chairman of the Board on August 17, 2010, the full
text of which follows:
August 17, 2010
Jacques A. Nasser
Chairman of BHP Billiton Limited
180 Lonsdale Street
Melbourne, VIC 3000
Dear Mr. Nasser:
The Board of Directors of Potash Corporation of Saskatchewan Inc.
(PotashCorp) has reviewed your August 13, 2010 letter proposing that
PotashCorp and BHP Billiton enter into discussions regarding a
transaction in which BHP Billiton would acquire PotashCorp at US$130 per
share in cash.
After carefully and thoroughly reviewing the contents of your
unsolicited proposal, with the benefit of advice from our financial and
legal advisors, we have unanimously concluded that your proposed price
grossly undervalues PotashCorp and its strong prospects for continued
growth and shareholder value creation.
In particular, we believe the timing of your proposal is highly
opportunistic given that, among other things, the industry is still in
the early stages of a recovery. In our view, PotashCorp is significantly
and disproportionately undervalued as a result of our strategic
decisions to match production with demand while continuing to invest in
our infrastructure. The Board determined that your proposal fails to
adequately recognize the value of PotashCorp's premier position in the
industry, the value of our planned capacity expansions and the value of
our equity investments.
The PotashCorp Board strongly and unanimously believes that PotashCorp
has a bright future as an independent company and nothing in your August
13, 2010 letter provides the basis for PotashCorp to alter its course.
Accordingly, we do not believe the proposed transaction is in the best
interests of our shareholders. As we are committed to open, transparent
treatment of our shareholders and other stakeholders, we are making your
proposal and our response publicly available.
/s/ Dallas J. Howe
Dallas J. Howe
BofA Merrill Lynch, Goldman, Sachs & Co. and RBC Capital Markets are
acting as financial advisors to PotashCorp and Jones Day and Stikeman
Elliott are acting as its legal advisors.
Potash Corporation of Saskatchewan Inc. is the world's largest
fertilizer enterprise by capacity producing the three primary plant
nutrients and a leading supplier to three distinct market categories:
agriculture, with the largest capacity in the world in potash, third
largest in each of nitrogen and phosphate; animal nutrition, with the
world's largest capacity in phosphate feed ingredients; and industrial
chemicals, as the largest global producer of industrial nitrogen
products and the world's largest capacity for production of purified
industrial phosphoric acid. PotashCorp's common shares are listed on the
Toronto Stock Exchange and the New York Stock Exchange. As of June 30,
2010, 49.03% of the common shares were held in Canada, 37.59% of the
common shares were held in the United States and 13.38% of the common
shares were held outside of Canada and the United States.
This release contains forward-looking statements or forward-looking
information (forward-looking statements). These statements are based on
certain factors and assumptions including foreign exchange rates,
expected growth, results of operations, performance, business prospects,
evaluations and opportunities and effective income tax rates. While the
company considers these factors and assumptions to be reasonable based
on information currently available, they may prove to be incorrect.
Several factors could cause actual results to differ materially from
those expressed in the forward-looking statements, including, but not
limited to: future actions taken by BHP Billiton in connection with its
unsolicited, non-binding proposal; fluctuations in supply and demand in
fertilizer, sulfur, transportation and petrochemical markets; changes in
competitive pressures, including pricing pressures; the recent global
financial crisis and conditions and changes in credit markets; the
results of sales contract negotiations with China and India; timing and
amount of capital expenditures; risks associated with natural gas and
other hedging activities; changes in capital markets and corresponding
effects on the company's investments; changes in currency and exchange
rates; unexpected geological or environmental conditions, including
water inflow; strikes and other forms of work stoppage or slowdowns;
changes in and the effects of, government policy and regulations; and
earnings, exchange rates and the decisions of taxing authorities, all of
which could affect our effective tax rates. Additional risks and
uncertainties can be found in our Form 10-K for the fiscal year ended
December 31, 2009 under captions "Forward-Looking Statements" and "Item
1A - Risk Factors" and in our other filings with the US Securities and
Exchange Commission and Canadian provincial securities commissions.
Forward-looking statements are given only as at the date of this release
and the company disclaims any obligation to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
PotashCorp will host a conference call on Tuesday, August 17,
2010 at 8:30 am Eastern Time.
A slide presentation will accompany the conference call and will be
on the Company's website.
Please note the appropriate dial-in number for your location below
call at least 10 minutes prior to the start time.
No reservation ID
From Canada dial: 1-877-354-7102
From USA dial: 1-877-902-6545
elsewhere dial: +1-412-902-6510
visit href="www.potashcorp.com">www.potashcorp.com for
a live webcast of the conference call.
This news release is also available on the Company's website.
SOURCE Potash Corporation of Saskatchewan Inc.
For further information: For further information:
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