Donald Lindsay, president and chief executive officer of Teck Resources in his office on Burrard Street in Vancouver.LAURA LEYSHON
As Potash Corp. works on a deal to beat BHP Billiton $38.6-billion (U.S.) hostile takeover bid, one major Canadian player insists it won't be part of any counteroffer.
Vancouver-based miner Teck Resources Ltd. said Tuesday it will not play a role in any consortium that could step forward to challenge BHP.
"We're not involved," Teck chief executive Don Lindsay said when asked about the company's role in a possible rival bid.
While Teck's main assets are coal, copper and zinc, there has been speculation the miner could follow the lead of its larger rivals, such as Brazil's Vale and Australia's BHP, and diversify its holdings into potash, a key ingredient in fertilizer used to boost crop production.
What's more, given that China is believed to be a lead contender in any counteroffer for Potash Corp., there has been some suggestion Teck's relationship with sovereign wealth fund China Investment Corp. (CIC) could expand into potash. CIC owns a 17-per-cent stake in Teck.
Mr. Lindsay said it is "unlikely" Teck could at some point get involved in potash.
"We watch what's happening. I understand the long-term view that people have and I agree with that but we've got enough on our plate right now. We've got a lot of growth," he said after speaking at a coal conference in Whistler.
Teck recently rebounded from its acquisition of Fording Canadian Coal Trust, for which it paid $14-billion in mid-2008 on the eve of the financial meltdown. It took on nearly $10-billion in debt, just as the credit markets froze. Teck made a comeback several months later after selling assets and refinancing debt, helped also by a commodities rebound.
A Canadian player is considered key in any consortium that tries to outbid BHP's unsolicited $130-a-share offer for Saskatoon-based Potash Corp., the world's largest fertilizer firm.
Potash Corp. chief executive Bill Doyle has said that "BHP will not be the only bidder," as his company's shares trade just under $150 on the New York Stock Exchange.
While the stock prices suggests Potash Corp. could be sold at a higher price, a rival bid has yet to surface. Most analysts believe it's simply a matter of time.
"Patience is likely where other bids are," Morgan Stanley analysts Vincent Andrews and Megan Davis said in a report, likening the process to a game of poker. "We see potential other bidders likely currently engaged in a 'check raise' ... waiting to see if the original bidders' posture changes before making an initial move."
David Ebner