Tuesday, August 31, 2010

BHP (NYSE:BHP) Pressuring Potash (NYSE:POT) by Contacting Customers

BHP Billiton (NYSE:BHP) is increasing the pressure on Potash Corp. (NYSE:POT) by contacting a large number of their customers, which seems to be getting under the skin of some at the giant fertilizer company.

In a letter dated August 30, Potash head of sales Stephen Dowdle, who sent the letter to customers, said, "Since the purpose of BHP Billiton's call clearly was not to solicit your potash order from BHP Billiton's Jansen project ... we consider this contact to be inappropriate." He also said in the letter that the contact by BHP was "highly unethical."

The reference to the Jansen Project is a potash resource recently acquired by BHP in Saskatchewan, which production has been started yet, or even cleared by directors. In other words, Dowdle was saying there could be no reason for BHP to be contacting them for business purposes.

Dowdle concluded, "We can only assume that BHP Billiton's purpose is to sow seeds of doubt and confusion about the future of Potash Corp by raising questions about our ability to do business across the nutrient spectrum as well as the future location and makeup of our sales organization."

The letter was included in a regulatory filing by Potash, although it spoke in general and not specific terms about what BHP was saying to their customers.

This is no doubt a move by BHP to put into the minds of their customers that they would be better off with them owning Potash than Potash continuing on as they are.

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