Potash has seen wild changes in price over the past three years, ranging from $200 to $1,000. It was driven higher by food shortages, but pushed down during the recession as farmers moved to less expensive fertilizers. Potash prices are now rebounding, sitting around $375 as of 19 August, 2010. This photo shows mill manager Josh Wheeler examining a pile of processed potash at the Mosaic Potash mine storage facility in Colonsay, Saskatchewan.
BHP is fighting back against takeover target Potash Corp. calling legal claims that it conspired to drive down potash prices before making its hostile bid "implausible" and the lawsuit a tactic to assess the competition.
Australia-based BHP is asking the court to dismiss Potash Corp.'s lawsuit filed last week, which accuses the world's largest miner of misleading investors to try to win control of the world's largest potash producer at a lowball price.
On Monday, BHP's lawyers are expected to appear in a Chicago courtroom to request rejection of part of the lawsuit that demands the company immediately hand over reams of documents detailing its decision to enter the potash industry and make last month's $38.6-billion (U.S.) bid for Potash Corp.
BHP calls Potash Corp.'s information request "unreasonably burdensome" and a "fishing expedition," according to court documents.
BHP also argues there is no rush for the information given that Potash Corp.'s lawsuit comes more than a month after the bid was made.
"Any harm is self-inflicted and is due to Potash Corp.'s delay in commencing this action," BHP said in documents filed late Friday in a U.S. District Court in Illinois.
BHP alleges Potash Corp. is using the lawsuit as a way to get competitive information.
"Potash Corp.'s attempt to use this lawsuit as a vehicle to assess and litigate the strengths of a business competitor is an abuse of this court's processes," the documents state.
Potash Corp. has rejected BHP's $130-per-share offer as too low and is working to put together a counter bid.
Potash Corp., the world's largest producer of the fertilizer ingredient, alleges in its lawsuit that BHP vowed to enter the potash market by developing new mines and running them at full capacity, which would pose a competitive threat to existing producers.
That, in turn, contributed to a drop in Potash Corp.'s stock price, making its bid possible at an attractive level, the lawsuit alleges.
BHP calls those allegations "speculative and implausible," in particular that it would spend more than a billion dollars to develop a potash project as a "head feint."
"Not only is the magnitude of the investment totally inconsistent with the ascribed motivations, but also BHP Billiton could hardly expect that such a strategy would work and that the market would not see through such a ploy (if that was what it was), nor could it have any assurance that some other party would not reap the 'benefit' of the bargain opportunity allegedly created by its alleged actions," the documents state.
BHP also said it plans to file a motion to dismiss the entire lawsuit in the coming days.
A spokesman for Potash Corp. declined on Sunday to comment on the legal action.