The Canadian government should insist that BHP Billiton list on the Toronto Stock Exchange as a condition of allowing it to take over Potash Corp. of Saskatchewan. That’s not an original thought, others have voiced it. But there is a compelling reason to make a TSX listing mandatory.
PotashCorp is the sixth largest company on the TSX. If the Australian company wins control and PotashCorp shares are delisted, the exchange will suffer a measurable loss. Based on the value of BHP’s bid and over 296 million outstanding PotashCorp shares, the fertilizer giant is worth over $40 billion.
By comparison Teck Resources, with more than 580 million Class B shares trading recently in the $40 range, is worth $23 billion.
That brings up another thought … Could Teck make a better offer than BHP for PotashCorp? Teck operated the Vade potash mine from 1969 to 1996 when the venture was sold to Agrium. The current owner operates it as the Vanscoy mine in the town of the same name.
PotashCorp is desperately seeking to block BHP’s takeover. It is trying to find a white knight to make a better bid. A Chinese partner is not out of the question, and the name Sinochem has surfaced recently.
PotashCorp recently filed a complaint against BHP Billiton in a United States district court, accusing BHP of misleading investors and attempting to manipulate the perceived value of the Canadian company. BHP won the first skirmish when the court rejected PotashCorp’s request for a wide range of documents. The hearing on the entire complaint is scheduled for Nov. 4, two weeks before BHP’s offer is to expire.
Circle Nov. 18, 2010, on your calendar. That is the day BHP’s bid is set to expire. I hate to say it, but after six weeks without a viable alternative, BHP Billiton’s bid may well succeed.