R BHP Billiton was yesterday forced to extend the deadline for its offer for Canada’s PotashCorp by a month to comply with regulatory requests for extra information.
PotashCorp investors now have until 18 November to accept, though analysts at Citigroup warned shareholders may prove unwilling to sell up unless BHP raises its $130-per-share offer – a move seen as unlikely unless a counter-bid emerges.
“The probability of a white knight [emerging] or of BHP overpaying is low, in our view, hence we see a risk the deal may not proceed,” Citi said.
However, BHP first faces the hurdle of convincing authorities in Canada and the US of the merits of its bid, which must be judged of “net benefit to Canada” before it can proceed.
The Canadian Competition Bureau issued a supplementary information request on 20 September, forcing the extension of the acceptance deadline.
BHP insisted it remains “confident that the offer will receive all requisite regulatory approvals in due course”, though it must also win over the US Federal Trade Commission, officials from PotashCorp’s home province of Saskatchewan and Investment Canada before it gets the green light.
Liberum Capital’s Dominic O’Kane said the information request suggested BHP “remains in the driving seat” in talks with the regulator, though it will give counter-bidders extra time.
PotashCorp is currently attempting to put together a white knight bid from a consortium in China.