BHP Billiton head office in Melbourne.MICK TSIKAS
BHP Billiton Ltd. has finalized the $45-billion (U.S.) of loans needed to back its hostile takeover offer for Potash Corp. of Saskatchewan Inc. amid some analyst concerns the bid isn't a good value for the world's largest mining company.
BHP has five main banks arranging the financing package: Banco Santander, Barclays Capital, BNP Paribas, JPMorgan, Royal Bank of Scotland and Toronto-Dominion Bank. They have signed up about 20 other banks, including Canadian Imperial Bank of Commerce; Scotia Capital and UBS Investment Bank, to split up the risk on the loan package.
The funds will support BHP's unsolicited $38.6-billion offer for Saskatoon-based Potash Corp., the world's largest producer of potash. Potash Corp. has rejected the $130 per share offer as too low.
Potash Corp. shares are trading at $147.28 in New York, which suggests a rival offer is expected or BHP will increase its bid.
Analysts have speculated BHP will need to increase its bid to beyond $150 per share to succeed, but the higher the price goes the less attractive the deal appears to some.
HSBC said the offer has "no claimed synergies and some risks," noting that BHP has no experience operating potash mines.
"Value could be created, but the evidence remains unconvincing," HSBC analyst Andrew Keen said in a report Friday while cutting BHP's rating to neutral from buy.
BMO Nesbitt Burns said in a report this week that BHP could be better off building its planned Jansen potash project in Saskatchewan than overpaying for Potash Corp.
Since making the bid last month, BHP said it plans to both build Jansen and buy Potash Corp., which has five potash mines in Saskatchewan and one in New Brunswick.