BHP Billiton needs to clear three hurdles over the next week before it will be free to raise its $39 billion bid for Potash Corp, as widely expected.
The UK’s Sunday Times, citing sources close to the situation, reported that BHP plans to sweeten its offer for the world’s biggest fertiliser maker by 10 percent.
A person familiar with the situation, however, said BHP was focused on clearing regulatory hurdles, including winning approval from the Canadian government, before it does anything else.
Major BHP investors said the company should be wary about bumping up the bid price and several objected to an increase of more than 10%.
Ottawa is due to decide by November 3 whether BHP’s bid for Potash Corp will bring a net benefit to Canada, which would allow it to clear the bid or approve it with conditions.
When asked if BHP could raise its offer ahead of the November 3 ruling by Ottawa, the person said: “No”.
“There is only one offer on the table,” the person added.
BHP Billiton, the world’s biggest mining group, declined to comment on whether it plans to raise its bid by 10%.
Canada’s ruling Conservatives are under pressure from Saskatchewan, home to Potash, and four other provinces to block the bid, but Industry Minister Tony Clement has said Canada needs to be open to foreign investment.
NO WHITE KNIGHT
After Ottawa’s decision, a US court is due to hear on November 4 Potash’s call for an injunction to stall BHP’s bid on the grounds it did not give enough information about its intentions.
The final regulatory hurdle is a hearing on November 8-9, when Saskatchewan’s securities watchdog is set to hear BHP’s challenge to Potash’s poison pill.
BHP wants the shareholder rights plan suspended, while Potash wants it extended to give time for a white knight to emerge. BHP has not ruled out raising its offer, but to date has kept reminding the market that its offer is the only one on the table.
“They (BHP) could well put forward one final bid to get it over the line,” said James Holt, investment specialist at BlackRock Investments, BHP’s biggest single shareholder.
“But the much bigger issue is that there hasn’t been any white knight that has come along.
It’s become quite clear there are very few people out there with the capacity to buy (Potash) out.”