Potash Corp./Saskatchewan (POT), the world’s largest fertilizer producer, on Tuesday rejected an unsolicited $38.6 billion, or $130 a share in cash, takeover proposal from BHP Billiton Ltd. (BHP) of Australia as too low, prompting speculation of a higher bid.
Potash turned down the cash offer, a 16% premium to POT Monday’s closing price, saying it was “grossly inadequate” as it undervalues the company’s global operating capacity and potential to capitalize on growing food demand.
“The company isn’t for sale, but we’re not opposed to a [deal and] we certainly don’t expect it to be stolen from shareholders,” Potash Chief Executive Bill Doyle said in a conference call with analysts and investors Tuesday morning.
Shares in Potash were up 30% at $142.20 in midday trading on the New York Stock Exchange, well above the $130 unsolicited all-cash offer price made by BHP, suggesting that a deal will get done between the two co.’s, perhaps for more than $150 a share.
BHP confirmed in a statement that it has made an approach regarding a possible acquisition of Potash, adding that it continues to review its options and will make a further announcement in due course.
POT shares have traded between $83.75 and $143.65 over the last 52 weeks.