BHP investors set $155 as top price for Potash

By Cecilia Valente and Sonali Paul

LONDON/SYDNEY (BestGrowthStock) – Investors in mining group BHP Billiton have on average put a $155 per-share maximum on BHP’s bid for fertilizer producer Potash Corporation, according to a Reuters poll.

A sample of 26 BHP Billiton shareholders across Britain, continental Europe, Australia, Asia and South Africa on average said the acquisition would start be “prohibitively expensive” should it cross that threshold.

BHP Chief Executive Officer Marius Kloppers is traveling the United States this week, getting feedback from his own shareholders and seeking to woo Potash Corp investors after an initial bid worth $39 billion was rejected on August 17.

The range for a maximum price in the poll was between $130 per share — the initial offer price — and $200 a share.

The poll included mix of large, medium-sized and small investors, who hold a combined 236 million shares in BHP, more than 4 percent of the total.

Five respondents said BHP should stick to the original $130 a share bid for Potash, the world’s largest fertilizer group, and there were fears Kloppers could be tempted to overreach.

The acquisition of Potash is touted as a strategic move to tap expected growth in demand for fertilizer in emerging markets. This could lead BHP to bid “too aggressively,” a Singapore-based shareholder said.

“The CEO hasn’t made any big acquisitions. He may see this as his defining moment and outbid any competitor that comes in,” the shareholder said.

In a separate poll last month, Potash investors said a deal could happen at $162 a share, while analysts in the sector said a bid of $157 was likely to succeed.

FEW DOUBTS

China Business news said on Wednesday Chinese authorities might launch an antimonopoly probe into BHP’s bid for Potash, but investors in BHP, the world’s top mining group, were still sanguine about the chances of success.

Asked how likely it was that BHP would end up acquiring Potash, the 17 shareholders who responded came out with an average answer of 62 percent. Only one investor put the chances at less than 50 percent.

Talk of the antitrust probe came as expectations cool of a higher bid and one U.S.-based investor said most of BHP’s hedge fund holders “would be happy to sell their shares at around $145-$146.”

The BHP investors are also convinced that there will be no dramatic bidding war, despite persistent rumors that a Chinese white knight might emerge. Only three predicted a bid battle.

“(This is) purely because there is no other company with the current capacity, or potential appetite, for such a large acquisition at this stage of the cycle and level of spot potash price, other than obviously a Chinese government backed bid,” said a South African shareholder.

This shareholder thought the Saskatchewan government, home of the takeover target, would be more likely to do business with BHP than Chinese investors.

BHP investors were split over whether they would prefer the deal to go ahead or a distribution of the cash to shareholders.

Investors accounting for a total of about 120 million shares told Reuters they would prefer BHP to return the cash, with two proposing a share buyback.

“I’ve said since day one, we think it’s more accretive for shareholders for BHP to return capital. And we don’t think diversification for diversification’s sake is a reason to buy Potash Corp,” said one Sydney-based shareholder.

(Additional reporting by Michael Smith in Australia, with Joseph Chaney, Denny Thomas and Chyen-Yee Lee in Hong Kong, Eric Onstad in London and Kevin Lim in Singapore; Editing by David Holmes)

BHP investors set $155 as top price for Potash