TORONTO — Canadian fertilizer producer Potash Corp. said Friday its board of directors will review the $38.5 billion hostile takeover bid from BHP Billiton Ltd., shortly after BHP formally launched its offer.
Potash Corp., the world's largest fertilizer producer, advised shareholders not to take any action on the Australian mining giant's bid until its review process is complete.
"Potash Corp.'s board will make a recommendation to shareholders regarding the offer, but in the meantime... advises shareholders not to take any action regarding the offer," the company said in a statement.
The attempt by the Anglo-Australian company to take over PotashCorp has the potential to be the biggest foreign takeover in Canadian history.
The move by the Saskatchewan-based company comes after BHP Billiton said earlier this week it would go directly to shareholders with the $130 a share offer after the board rejected BHP's offer on an informal basis.
BHP said it was offering a 20 percent premium to the closing price on Aug. 11 — the day before BHP's first approach to Potash directors.
BHP Billiton also said it plans to maintain current job levels at PotashCorp's Saskatchewan and New Brunswick operations "for the foreseeable future."
But Bill Doyle, Potash Corp.'s chief executive, called the offer "ludicrous," saying it grossly undervalues the company.
PotashCorp has refused to speculate on what its shares are really worth and BHP Billiton has said it won't comment on what it would be willing to pay if a rival steps up. BHP said it currently has the only offer on the table.
Credit Suisse analysts predicted Potash may accept a bid based on a 50 percent premium, and said in a report they expect BHP to make a revised offer in the coming weeks or months. Some analysts said BHP rival Rio Tinto may be contemplating a counter offer but others thought that unlikely since it sold its potash businesses in 2009.
The leader of Canada's New Democrat Party, Jack Layton, said Friday his party wants the Conservative government to perform a comprehensive review of the potential acquisition, which would include public hearings in the regions that would be most affected.
He said he wanted to avoid a repeat of what happened with Vale Inco, in which the Brazilian miner and its Canadian unionized workforce were locked in one of the longest labor disputes in the country's history last year.
Potash, a key fertilizer ingredient, is a big global business dominated by Belarus Potash Co. and Canpotex Ltd., which represents Saskatchewan potash producers.
Formally known as Potash Corp. of Saskatchewan, the Canadian company was created by the provincial government in 1975 and was privatized in 1989. Canadian legislation dictates that it maintain its head office in Saskatchewan.