AU. S. federal judge said on Sept. 27 he would allow the discovery process to proceed in a lawsuit filed by PotashCorp to fend off BHP Billiton’s $39-billion hostile takeover bid.
The lawsuit, filed last week in a U. S. District Court in Chicago, alleges that BHP misrepresented material facts related to its bid for the world’s largest producer of potash – a key crop nutrient.
As part of the discovery process, PotashCorp has asked that BHP produce a long list of documents that include BHP’s statements regarding investments in the potash industry and the minutes of BHP’s board meetings that relate to the potash sector and its plans to develop its Jansen potash project in Saskatchewan.
Judge David Coar said that the court would conduct a hearing on PotashCorp’s request for a preliminary injunction to block BHP from proceeding with its tender offer on Nov. 4, ahead of the Nov. 18 deadline on BHP’s bid.
An attorney representing BHP in the matter told the court that the Anglo-Australian miner intends to file a motion to dismiss the lawsuit.
PotashCorp claims that the Anglo-Australian miner sought to drive down the Canadian company’s perceived value by strategically timing announcements about BHP’s plans to become a direct competitor in the potash business. That way, the suit argues, BHP could eventually make a bid for PotashCorp that was low enough to avoid triggering a BHP shareholder vote.
Before bidding for PotashCorp 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 an opportunity to scupper a deal.