NG giant BHP Billiton’s shares rose yesterday following its decision to abandon its hostile takeover of Potash Corp and begin a $4.2bn (£2.6bn) share buyback, as analysts pored over the world’s largest mining group’s next move.
BHP’s London-listed shares closed 1.8 per cent up at £24.06, outperforming a 0.4 per cent gain in the FTSE 100.
Rating agency Fitch repeated its A+ rating of BHP and said the company was no longer on its negative watch list yesterday following the collapse of the $39bn takeover.
BHP said it will book $350m costs for the Potash Corp bid, mainly due to the $45bn financing facility it lined up.
The failed Potash Corp deal is a blow to BHP’s investment banks JP Morgan, Royal Bank of Scotland and Barclays. Potash Corp was advised by Bank of America Merrill Lynch, Goldman Sachs and RBC Capital Markets.
BHP released a statement yesterday morning revealing details of the concessions it offered the Canadian government before it rejected its advances.
The firm said it had offered to list on the Toronto Stock Exchange to prove its commitment, as well as offering $370m towards Canadian infrastructure and to forfeit some of its tax advantages as an offshore company.
Chief executive Marius Kloppers said the firm would now finish its suspended $13bn share buyback plan and invest $15bn in existing operations.
Analysts yesterday turned their attention to other acquisition targets. “For us the two most obvious potential targets are Woodside Petroleum and Anardarko Petroleum, while outside of oil and gas we also feel an acquisition of Freeport would have its merits,” said Dominic O’Kane at Liberum Capital.
Analysts at Morgan Stanley named Woodside as a “plausible plan B” last week, when oil firm Shell disposed of some of its stake in the firm. BHP has been linked with Woodside for a decade through joint venture projects, though other observers including Macquarie Bank were doubtful of a full-blown takeover.
TIME LINE | BHP BILLITON’S THREE-MONTH LOSING BATTLE TO BUY POTASH
Potash’s shares jump 26 per cent after BHP announces a $39bn hostile takeover bid.
Potash begins a “poison pill” shareholder rights issue to dilute BHP’s share holding.
Potash launches a lawsuit in Chicago against BHP, claiming it misled investors.
US Federal Trade Commission gives the bid the green light.
Report by Conference Board of Canada supports BHP’s bid but warns against a Chinese rival offer.
Ontario Teachers’ Pension Plan reported to be in talks with Temasek to spoil BHP’s bid.
Saskatchewan provincial government opposes BHP’s bid, with premier Brad Wall threatening to sue the federal government if the deal goes through.
Canadian industry minister rejects the bid under the Investment Canada Act, saying the deal offered insufficient benefit to the country. Tony Clement then gives BHP 30 days to amend its offer.
BHP officially withdraws the bid after further talks with the Canadian government, and revives its share buyback.