TORONTO - Reports out of the United Kingdom say BHP Billiton could be ready to sweeten its hostile takeover bid for Saskatchewan's PotashCorp as Ottawa prepares to rule on whether it will approve the largest takeover in Canadian history.
PotashCorp. (TSX:POT) has repeatedly said the Anglo-Australian mining giant's offer of US$38.6-billion cash is too low, given the important long-term value of its business.
The Sunday Times in London cited sources close to the deal as saying BHP's offer of US$130 per PotashCorp share could be raised by as much as 10 per cent.
A Melbourne-based spokeswoman for BHP told The Canadian Press that the company had no immediate comment on the report.
PotashCorp shares opened up 33 cents at C$147.83 on the Toronto Stock Exchange on Monday morning.
PotashCorp has been embroiled in the bitter takeover battle with BHP since August.
Potash Corp CEO Bill Doyle, who has said the bid significantly undervalues the fertilizer giant, has been trying to attract a white-knight suitor to compete with BHP.
UBS analyst Brian MacArthur recently raised his target price on the company from US$170 to $175 per share.
"Given the improved fertilizer market we believe the shares would be trading about $130 per share in the absence of a bid," MacArthur wrote in a note to clients Monday.
Industry Minister Tony Clement is wrestling with whether to allow the takeover in the face of opposition to the deal from Saskatchewan Premier Brad Wall, as well as the federal opposition parties and several other provinces.
Under the Investment Canada Act, the federal government makes its decisions based on whether the foreign takeover would bring a "net benefit" to Canadian communities.
BHP has already made several promises to Saskatchewan, saying it would locate the headquarters of its global potash operations in Saskatoon, it would maintain employment levels and it would make sure the province's coffers aren't hurt by the takeover.
Ottawa has said it will decide by Wednesday whether the PotashCorp takeover can go ahead.
If the government approves the deal, BHP Billiton would then be in a position to take the hostile offer directly to PotashCorp shareholders or try to work out a friendly deal by topping its current bid.
PotashCorp disclosed in a recent regulatory filing that it has spoken to 15 different "financial and state-sponsored potential bidders or investors" about making a competing bid for the company.
"The PotashCorp board believes that there is a real and substantial probability that alternatives to the BHP offer will emerge that will increase shareholder choice and enhance shareholder value," the company said in a filing with Saskatchewan's securities regulator.
Though BHP had made several promises in an attempt to woo Saskatchewan, Wall has said that no amount of promises are going to make him support the takeover.
Wall has raised concerns that BHP's plans to run PotashCorp's operations at full capacity would hurt expansion plans by other players in the industry, including Mosaic Co. (NYSE:MOS) and Agrium Inc. (TSX:AGU), potentially costing up to 750 jobs.
The premier has also said he believes Saskatchewan could lose between C$3 billion and $6 billion in revenue from taxes and royalties if BHP's bid is successful.
Potash Corp. of Saskatchewan Inc. is the world's biggest producer of the nutrient used in fertilizer.
