BHP sued by Potash Corp

Added by Gary Dunn on September 23, 2010

BHP Billiton was sued on Wednesday by Potash Corp, which wants to block BHP’s hostile bid amounting $39bn to take over the fertilizer company from Canada.

The basis of the lawsuit alleges that BHP did not inform investors about facts and misrepresented them, accusations that imply deceptive and fraudulent actions undertaken by BHP with regard to its giant offer.

BHP reacted to the lawsuit by stating that ‘Potash Corp’s actions seek to deprive its shareholders of a fully financed all-cash offer’ and that the company doesn’t think this legal action will delay nor interfere with its offer for the Canadian company.

The mining company is also accused by Potash Corp of intending to lower the perceived value of the Canadian company though its announcements of becoming a competitor in the potash business, that allegedly were strategically made.

Professor John Coffee from Columbia Law School, NY, stated that ‘Litigation is standard, but it accomplishes only modest goals of giving the target a window into the bidder and some delay’. It is very unlikely to result in a permanent injunction that ends the contest’. Potash Corp’s share value decrease on Wednesday by 72 cents amounting nearly $147.