BHP is waiting on the details of the shareholder rights plan implemented by PotashCorp on Tuesday, but the global miner could have to go to court to overturn the measure if its target does not play ball by retracting the plan voluntarily.
The rights plan, a common defence against hostile bidders in Canada, allows PotashCorp to issue new shares to existing investors for a knock-down price if BHP builds up a stake of over 20 per cent in the open market.
BHP chief executive Marius Kloppers played down the significance of the poison pill defence in a conference call yesterday, claiming that it is employed solely as a device to buy time for a target company to ensure any competing bids can come to the fore.
“I believe that the time our bid will be in the market will be enough to satisfy the normal period of a shareholder rights plan,” he said.
But PotashCorp stipulated that its plan would last for a minimum of 90 days – 30 days longer than the offer period earmarked by BHP Billiton.
BHP suffered another setback yesterday as ratings agency Moody’s said it would put the firm’s A1 ratings on review for possible downgrade, citing concerns over the $43bn pile of debt funding to be raised by the company.
LLOYD PENGILLY AND ADAM BRETT
OF ALL the raft of advisers licking their chops in anticipation at BHP Billiton’s $40bn bid for PotashCorp, it’s JP Morgan which is busy tucking the largest napkin under its chin.
As lead financial adviser, JP Morgan is coordinating its efforts for BHP Billiton between London and the US.
Leading the team on this side of the pond is one of the firm’s most senior bankers, Lloyd Pengilly, who was originally made one of the executive committee members when JP Morgan struck its joint venture with Cazenove back in 2004.
Pengilly is joined by Adam Brett, the head of the EMEA metals and mining group, who is a particularly busy bee at present. He is also currently advising Vedanta on its proposal to acquire a majority stake in Cairn India for up to $9.6bn, confirmed just three days ago. Brett previously advised on the creation of the JP Morgan Cazenove joint venture before joining the UK firm in 2005. He also sits on the FSA’s Listings Authority Advisory Committee.
BHP has also hired five further banking advisers – Toronto Dominion Securities, Banco Santander, Barclays Capital, BNP Paribas and Royal Bank of Scotland.