Tuesday, October 26, 2010

Hearing for BHP (NYSE:BHP) Challenge to Potash (NYSE:POT) Pill Scheduled for November 8

Assuming the deal is approved to go forward by November 3, BHP (NYSE:BHP) has been approved for a hearing on November 8 to challenge the attempt by Potash Corp. (NYSE:POT) make it expensive and difficult to gain a majority for the takeover.

The Canadian government will decide on November 3 whether or not to allow the deal to go forward, based on the parameters of the Investment Canada Act, which are based on whether it's beneficial for Canada for the deal to go ahead.

As far as the "poison pill" attempt by Potash, that would include allowing shareholders with 20 percent or over of outstanding common shares to be diluted. That makes it almost impossible to buy because of the prohibitive costs resulting from the dilution.

It works by giving other shareholders the option to acquire additional stock as huge discounts if they choose to.

Most of this is a delay tactic in an attempt to gain another suitor, but BHP said Potash has had ample time to find an alternative to their approximate $40 billion offer if there were legitimate offers out there.

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