BGC Voice and Electronic Brokerage

BHP Billiton has launched a mammoth hostile takeover bid for Canada's Potash, which values the world's largest fertiliser producer at $40 billion ($44 billion).

"Potash Corp will provide BHP Billiton with an immediate leadership platform in the global fertiliser industry and further diversify BHP Billiton's portfolio," BHP said in a statement unveiling the news, one day after Potash had rejected an unsolicited approach. The offer, worth the equivalent of €31 billion ($44.12 billion), would allow the energy and metals giant to expand in the agricultural sector amid soaring wheat prices and keen food demand to meet the needs of the world's rising population.

Potash is a fertiliser that is widely used in farming to replenish nutrients in soils and increase crop yields.

BGC Partners strategist analyst Howard Wheeldon agreed that the takeover bid was a "wise" move. "BHP is wise to tap into the agricultural sectors if it can," he told AFP. "With global populations increasing, and the need to feed ourselves ever more acute from land areas that cannot expand, (this area) is also one that should carry with it excellent margin potential."

However, Citigroup analysts warned that BHP would be better off developing its own existing potash project in Canada.

"In our opinion, BHP would be better off not pursuing an acquisition of Potash Corp. The cost of obtaining a friendly deal that would be needed to gain approval... looks too high," they wrote in a note to clients.

Howard Wheeldon Comments: BHP $44 Billion Bid For Potash Turns Hostile - Daily Telegraph (Australia) Online

Recent Press Releases