Potash Corp. has filed a lawsuit in a bid to block BHP Billiton’s $39 billion hostile takeover in the ongoing battle over control of the Canadian fertilizer company.
The suit alleges that BHP misrepresented and failed to inform investors about material facts. It also accuses BHP of engaging in fraudulent, deceptive and manipulative behaviour related to its offer, according to a Reuters report.
“We believe this lawsuit is entirely without merit and we will contest it vigorously,” BHP responded in a statement. “While PotashCorp’s actions seek to deprive its shareholders of a fully financed all-cash offer, we do not believe this lawsuit will interfere with or delay our offer.”
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The takeover battle, which began in mid-August, has become increasingly bitter with Potash Corp. attempting to thwart the bid with a management-led buyout of the company. It has also put in place a poison pill to fend of BHP.
Potash Corp. claims BHP sought to drive down the Canadian company’s perceived value by strategically timing announcements about its plans to become a direct competitor in the potash business. The suit alleges BHP could eventually make a bid for Potash Corp that was low enough to avoid triggering a BHP shareholder vote.
Before bidding for Potash Corp last month, BHP said it was focused on developing its Jansen potash project in Saskatchewan. The project, which is slated to begin production around 2015, is expected to be the world’s single largest potash mine once it completes a multi-year ramp-up process.
Under British law, a shareholder vote is required if a company attempts a takeover that exceeds 25 per cent of its own market valuation.
At $39 billion, or $130 a share, BHP’s current offer allows it to avoid a vote that would give its own shareholders a say.
