MEDIA RELEASE PR40855
PotashCorp's Board of Directors Rejects BHP Billiton's Unsolicited, Non-Binding Proposal as Grossly
Inadequate
SASKATOON, Aug. 17 /CNW-AsiaNet/ --
Symbol: POT
Listed: TSX, NYSE
Potash Corporation of Saskatchewan Inc. ("PotashCorp") today announced that its Board of Directors has received
and unanimously rejected an unsolicited proposal from BHP Billiton Limited (ASX: BHP; LSE: BLT; NYSE: BHP)
("BHP Billiton") to enter into a transaction under which BHP Billiton would acquire PotashCorp for US$130 per share
in cash. PotashCorp's Board of Directors thoroughly reviewed BHP Billiton's unsolicited proposal with the assistance
of its independent financial and legal advisors and concluded that the proposal is grossly inadequate and it is not in
the best interests of its shareholders for PotashCorp to enter into discussions with BHP Billiton.
"The PotashCorp Board of Directors unanimously believes that the BHP Billiton proposal substantially undervalues
PotashCorp and fails to reflect both the value of our premier position in a strategically vital industry and our
unparalleled future growth prospects," said PotashCorp Chairman Dallas J. Howe. "After careful consideration, and
in the interest of transparency, our Board determined to proactively disclose BHP Billiton's unsolicited, non-binding
proposal to our shareholders. We believe it is critical for our shareholders to be aware of this aggressive attempt to
acquire their company for significantly less than its intrinsic value. The fertilizer industry is emerging from the recent
global economic downturn, and we feel strongly that PotashCorp shareholders should benefit from the current and
potential value of the Company. We believe the BHP Billiton proposal is an opportunistic effort to transfer that value
to its own shareholders."
PotashCorp President and Chief Executive Officer Bill Doyle commented, "Global demand for food is steadily
increasing, creating an attractive operating environment for the entire fertilizer industry and, with our premier
position, PotashCorp is uniquely poised to benefit. We believe our Board and management team are successfully
executing our business plan and producing strong results. With our unmatched asset base and proven strategies, we
believe we are well positioned to exceed the expectations of customers around the world and deliver compelling
value to our shareholders."
In making its determination, the PotashCorp Board of Directors considered a number of factors including:
- The BHP Billiton Proposal Fails to Reflect PotashCorp's Prospects for
Continued Growth and Shareholder Value Creation: PotashCorp is poised
to deliver strong earnings growth as agricultural fundamentals
continue to strengthen, global demand for its products - especially
potash - increases, and its strategic investments in new potash
capacity uniquely position it to capture a disproportionate share of
demand growth. The Company firmly believes it is on the verge of an
inflection point, where potash demand will return to historical
trend-line growth, supply will tighten, and pricing will improve. The
powerful long-term drivers of the fertilizer business - population
growth and improving diets in developing nations - changed little as
a result of the global downturn, and the catalysts expected to fuel
near- and medium-term demand are accelerating. A rising demand for
food - coupled with historically low global grain inventories -
support a powerful period of growth for agriculture. The PotashCorp
Board believes that no other company is better positioned to
capitalize on these growth opportunities. The Board is confident that
PotashCorp can deliver significantly greater value to its
shareholders than BHP Billiton's inadequate proposal.
- PotashCorp is a Uniquely Valuable Asset: PotashCorp is uniquely
positioned as the premier global producer with unparalleled potash
assets in an industry characterized by substantial barriers to entry,
few producers and no known product substitutes. The BHP Billiton
proposal fails to adequately compensate PotashCorp shareholders for
this strategic position and scarcity value. In addition, the BHP
Billiton proposal does not reflect PotashCorp's substantial recent
and ongoing investments to increase capacity, the value of
PotashCorp's strategic equity investments in China, Chile, Jordan and
Israel, and its unmatched ability to meet the needs of North American
customers and growing offshore potash markets.
- The BHP Billiton Proposal Represents a Wholly Inadequate Premium For
Control: At US$130 per share, BHP Billiton is proposing a premium of
only 16% over PotashCorp's August 16, 2010 closing stock price. This
low premium does not reflect the strategic importance, scarcity value
and quality of PotashCorp's assets, or the unique opportunity
PotashCorp affords to BHP Billiton or any other acquiror.
Furthermore, the premium offered is substantially inferior even to
average control premiums globally and in Canada.
- The BHP Billiton Proposal is Timed to Deprive PotashCorp Shareholders
of Full Value: BHP Billiton is opportunistically attempting to
transfer the upside value in PotashCorp to its own shareholders at
the expense of PotashCorp shareholders. PotashCorp believes the
timing of the BHP Billiton proposal is highly opportunistic and an
ill-disguised attempt to exploit an anomaly in the equity market
valuation of PotashCorp. PotashCorp believes that BHP Billiton
intentionally launched its proposal just as the fertilizer industry
emerges from an unprecedented demand decline associated with the
global downturn in order to seize the value that PotashCorp is poised
to create. The Company is confident that, given the demand growth and
margin potential anticipated in the months and years ahead, the
continued execution of PotashCorp's strategic plan would deliver
substantially more value to PotashCorp shareholders than the BHP
Billiton proposal.
The Board of Directors communicated its response to BHP Billiton in a letter sent to its Chairman of the Board on
August 17, 2010, the full text of which follows:
August 17, 2010
Jacques A. Nasser
Chairman of BHP Billiton Limited
BHP Billiton Centre
180 Lonsdale Street
Melbourne, VIC 3000
Australia
Dear Mr. Nasser:
The Board of Directors of Potash Corporation of Saskatchewan Inc. (PotashCorp) has reviewed your August 13,
2010 letter proposing that PotashCorp and BHP Billiton enter into discussions regarding a transaction in which BHP
Billiton would acquire PotashCorp at US$130 per share in cash.
After carefully and thoroughly reviewing the contents of your unsolicited proposal, with the benefit of advice from our
financial and legal advisors, we have unanimously concluded that your proposed price grossly undervalues
PotashCorp and its strong prospects for continued growth and shareholder value creation.
In particular, we believe the timing of your proposal is highly opportunistic given that, among other things, the
industry is still in the early stages of a recovery. In our view, PotashCorp is significantly and disproportionately
undervalued as a result of our strategic decisions to match production with demand while continuing to invest in our
infrastructure. The Board determined that your proposal fails to adequately recognize the value of PotashCorp's
premier position in the industry, the value of our planned capacity expansions and the value of our equity
investments.
The PotashCorp Board strongly and unanimously believes that PotashCorp has a bright future as an independent
company and nothing in your August 13, 2010 letter provides the basis for PotashCorp to alter its course.
Accordingly, we do not believe the proposed transaction is in the best interests of our shareholders. As we are
committed to open, transparent treatment of our shareholders and other stakeholders, we are making your proposal
and our response publicly available.
Sincerely,
/s/ Dallas J. Howe
Dallas J. Howe
Board Chair
BofA Merrill Lynch, Goldman, Sachs & Co. and RBC Capital Markets are acting as financial advisors to PotashCorp
and Jones Day and Stikeman Elliott are acting as its legal advisors.
About PotashCorp
Potash Corporation of Saskatchewan Inc. is the world's largest fertilizer enterprise by capacity producing the three
primary plant nutrients and a leading supplier to three distinct market categories: agriculture, with the largest capacity
in the world in potash, third largest in each of nitrogen and phosphate; animal nutrition, with the world's largest
capacity in phosphate feed ingredients; and industrial chemicals, as the largest global producer of industrial nitrogen
products and the world's largest capacity for production of purified industrial phosphoric acid. PotashCorp's common
shares are listed on the Toronto Stock Exchange and the New York Stock Exchange. As of June 30, 2010, 49.03%
of the common shares were held in Canada, 37.59% of the common shares were held in the United States and
13.38% of the common shares were held outside of Canada and the United States.
This release contains forward-looking statements or forward-looking information (forward-looking statements). These
statements are based on certain factors and assumptions including foreign exchange rates, expected growth, results
of operations, performance, business prospects, evaluations and opportunities and effective income tax rates. While
the company considers these factors and assumptions to be reasonable based on information currently available,
they may prove to be incorrect. Several factors could cause actual results to differ materially from those expressed in
the forward-looking statements, including, but not limited to: future actions taken by BHP Billiton in connection with
its unsolicited, non-binding proposal; fluctuations in supply and demand in fertilizer, sulfur, transportation and
petrochemical markets; changes in competitive pressures, including pricing pressures; the recent global financial
crisis and conditions and changes in credit markets; the results of sales contract negotiations with China and India;
timing and amount of capital expenditures; risks associated with natural gas and other hedging activities; changes in
capital markets and corresponding effects on the company's investments; changes in currency and exchange rates;
unexpected geological or environmental conditions, including water inflow; strikes and other forms of work stoppage
or slowdowns; changes in and the effects of, government policy and regulations; and earnings, exchange rates and
the decisions of taxing authorities, all of which could affect our effective tax rates. Additional risks and uncertainties
can be found in our Form 10-K for the fiscal year ended December 31, 2009 under captions "Forward-Looking
Statements" and "Item 1A - Risk Factors" and in our other filings with the US Securities and Exchange Commission
and Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this
release and the company disclaims any obligation to update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by law.
PotashCorp will host a conference call on Tuesday, August 17, 2010 at
8:30 am Eastern Time.
A slide presentation will accompany the conference call and will be
available on the Company's website.
Please note the appropriate dial-in number for your location below
and call at least 10 minutes prior to the start time.
No reservation ID is required.
----------------------------------------------------
From Canada dial: 1-877-354-7102
From USA dial: 1-877-902-6545
From elsewhere dial: +1-412-902-6510
----------------------------------------------------
conference call.
This news release is also available on the Company's website.
SOURCE Potash Corporation of Saskatchewan Inc.
/CONTACT: Investors: Denita Stann, Senior Director, Investor Relations, Phone: (847) 849-4277, Email:
ir(at)potashcorp.com; Media: Bill Johnson, Director, Public Affairs, Phone: (306) 933-8849, Email:
pr(at)potashcorp.com; Eric Brielmann, Jamie Moser, Andrew Siegel, Joele Frank, Wilkinson Brimmer Katcher,
(POT. POT)
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