Growing the defences

28 October 2010 By Una Galani Follow @ugalani

The fertiliser group’s strong Q3 numbers and bullish outlook add to the pressure on the miner to lift its $39 billion hostile bid or walk away. However, neither side has reason to show its hand until the Canadian authorities decide whether to allow the deal to go ahead.

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Potash Corp on Oct. 28 issued a bullish outlook and delivered strong thirdquarter results, adding weight to its assertion that BHP Billiton's $39 billion hostile bid undervalues the world's largest fertiliser group.

The Canadian group raised its forecast for net income per share and said it now expects its key potash segment to deliver gross profit sales minus the cost of goods sold between $1.65 billion and $1.75 billion in 2010, up from previous expectations of $1.4 billion to $1.7 billion.

Potash Corp now forecasts that global industrywide demand for potash will be 60 million tonnes in 2011, up 10 percent from its previous forecast.

BHP's offer faces opposition from Potash Corp's home province of Saskatchewan, which depends on profitbased royalties. Canada is due to announce on Nov. 3 whether to allow the bid to proceed.

The Saskatchewan securities regulator is scheduled on Nov. 8 to hear a challenge from BHP designed to remove Potash Corp's poison pill shareholder rights plan. Potash Corp adopted the plan in August as part of its defence against BHP's offer.

BHP's $130 per share offer expires on Nov. 18. The miner's bid is conditional on receiving acceptances from more than 50 percent of Potash Corp shareholders.

In early trade on Oct. 28, Potash Corp's U.S.listed shares were down 2.3 percent at $143.91.

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