Court to rule on Potash-BHP suit ahead of tender expiry

By Eric Johnson

CHICAGO (BestGrowthStock) – A U.S. court will rule on Potash Corp’s (POT.TO: ) request for a preliminary injunction against unsolicited suitor BHP Billiton (BHP.AX: ), ahead of the November 18 deadline on the Anglo-Australian miner’s $39 billion tender offer, Judge David Coar said on Monday.

However, the eventual outcome in court will be of little significance, unless the world’s largest mining company is able to convince the Canadian government to allow its takeover bid to proceed.

Last week, Canada’s Industry Minister Tony Clement said the government had decided to block the bid for the world’s largest fertilizer maker, as a takeover did not offer a “net benefit” to Canada — a precondition under Canadian law.

BHP has time until December 3 to make additional representations to the Canadian government, in an attempt to alter the government’s decision on the takeover proposal.

Potash Corp has flatly rejected BHP’s hostile bid and it launched a lawsuit against BHP in September, in an attempt to stymie the $130-a-share takeover bid.

The Canadian fertilizer maker argues that BHP misrepresented material facts related to its bid for the world’s largest producer of potash — a key crop nutrient.

The Saskatchewan-based fertilizer maker has asked the court to issue a ruling in the case ahead of the expiry on BHP’s tender offer.

“I don’t intend to wait and I expect to have a ruling hopefully as soon as possible, but no later than November 18,” Judge Coar told the court.

Potash Corp has requested the court to order BHP to issue “corrective statements” to Potash Corp shareholders with regard to BHP’s intentions around its Jansen potash project in Saskatchewan and its plans on Canpotex — the overseas potash marketing organization that is jointly owned by Potash Corp, Mosaic Co (MOS.N: ) and Agrium Inc (AGU.TO: ).

Potash Corp’s suit claims that BHP sought to drive down the Canadian company’s perceived value by trumpeting its own plans to enter the potash business through Jansen — the project is eventually expected to be the world’s single largest potash mine with an annual capacity of 8 million metric tons.

Lawyers of Potash Corp, however argue that the project is a “smoke-screen” and produced an e-mail from BHP’s Chief Executive Marius Kloppers to the head of the company’s potash business Andrew Mackenzie to bolster their claim.

In the e-mail, Kloppers states that the Jansen project is not feasible with the current configuration. The e-mail was made public, as part of the discovery process in the lawsuit.

BHP on its part argues that the e-mail is not a prediction that the project will fail. The company also notes that its CEO has since been satisfied by his team’s efforts to reduce planned costs tied to the project.

The case is Potash Corp v. BHP Billiton in the U.S. District Court for the Northern District of Illinois Eastern Division, No. 1:10-cv-06024.

(Writing by Euan Rocha in Toronto; Editing by Anshuman Daga)

Court to rule on Potash-BHP suit ahead of tender expiry