BHP BILLITON will be forced to put its hostile bid for PotashCorp to a shareholder vote if it increases its original $40bn (£25.5bn) offer in order to win over the Canadian company’s investors.
According to Financial Services Authority rules, BHP will have to put its proposed takeover of PotashCorp in the hands of its own shareholders if its offer for the fertiliser company exceeds 25 per cent of its market value. Under the rules, BHP would have to seek approval from its shareholders if it ups its bid to $150 a share.
PotashCorp’s investors have suggested that BHP would need to raise its offer price to between $150 and $160 per share in order to win over the group’s board. And BHP analysts have suggested that the group can afford as much as $180 per share.
PotashCorp’s shares yesterday traded 16 per cent higher than BHP’s $130-a-share bid at around $150, suggesting the bid will need to be increased to be successful.
The mining giant’s current $130 a share offer does not require shareholder approval, and BHP yesterdaydeclined to comment on whether it will raise its bid. A spokesperson for BHP said that the original offer still stood.
PotashCorp confirmed on Monday that it was in talks with a number of possible “white knight” partners in a bid to block BHP’s hostile offer, which was made last week.