BHP Billiton Ltd. says there would be "no need" to sell Potash Corp. of Saskatchewan Inc.'s secondary nitrogen and phosphate divisions if its $38.6-billion (U.S.) bid proceeds, saying the global economy has improved and the assets could fit well in the diversified mining company.
BHP's statement comes in new court documents filed as part of a lawsuit launched against it by Potash Corp. alleging the world's largest miner made false and misleading statements in its takeover proposal.
Both companies are expected to argue their sides of the case in a court hearing set for Thursday in Chicago, the day after the federal government is set to decide Wednesday whether to approve BHP's proposed takeover. It's not yet clear if the lawsuit will go ahead if the bid is rejected.
BHP has denied the allegations in the lawsuit, including that it plotted for years to drive down the Potash Corp. share price to buy the company at a lower price.
In its legal complaint, Potash Corp. claims BHP failed to disclose its plans to sell the phosphate and nitrogen businesses as being "not for us," citing internal documents obtained through the lawsuit's discovery process.
"BHP's historic position has been that it was solely interested in PCS's 'primary commodity' - potash," Potash Corp. stated in its updated claim filed last week.
"As late as July 26, 2010, CEO [Marius]Kloppers had made additional internal statements indicating his continued support for divestiture of the assets after acquisition."
Potash Corp.'s nitrogen and phosphate division - each ranked third in terms of global production - are valued at between $8 to $12-billion, based on various analyst estimates.
In court documents filed late Tuesday, BHP responded saying its views on whether to sell the nitrogen and phosphate businesses have "evolved" since it started looking again at buying Potash Corp. in 2009.
"Because economic conditions have improved and BHPB's balance sheet has strengthened further, there is no need to sell assets to finance this acquisition; in addition, in assessing its overall portfolio, these businesses may fit in better than others and would not be top candidates for potential divestiture," said BHP, which produces a number of commodities such as iron ore, coal, copper, aluminum and diamonds.
Potash Corp. has five potash mines in Saskatchewan and one in New Brunswick. Its phosphate and nitrogen operations are located in the United States. It also has nitrogen facilities in Trinidad.
BHP also responded to allegations that its communications on plans to exit the Canpotex potash marketing arm have been inconsistent, saying the situation is "complicated."
BHP said its cautious approach to Canpotex should be "entirely understandable" and its "freedom of action" is limited by agreements it has not yet seen.
"BHPB has fully disclosed everything it can conceivably predict at this point. It is not required to speculate how the Canpotex issues may ultimately work out," BHP said.
Canpotex sells potash produced in Saskatchewan by Potash Corp., Mosaic Co. and Agrium to markets outside of North America.
BHP's plans to exit Canpotex if it buys Potash Corp. have been among the most controversial since it launched its hostile takeover offer in August.
In particular, it has angered politicians in Saskatchewan who worry that BHP leaving the cartel-like organization and producing more potash on its own will lead to lower potash prices, and in turn lower government revenues from potash royalties.
Saskatchewan hired the Conference Board of Canada to review BHP's offer for Potash Corp., one of the province's largest taxpayers, and the impact of the lost revenues and taxes.
In the review, the Conference Board concluded that Canpotex is "arguably becoming increasingly redundant as the worldwide market moves to fewer and fewer players."
BHP makes a similar argument, saying potash prices will eventually move to a more market-based system similar to changes it pushed in the iron ore and coal markets.