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BIL
BIBLT
BIL - BHP Billiton Plc - BHP Billiton Announces all-cash offer to acquire
Potashcorp
BHP Billiton Plc
Share Code: BIL
Share: GB0000566504
Number 21/10
NEWS RELEASE
BHP BILLITON ANNOUNCES ALL-CASH OFFER TO ACQUIRE POTASHCORP
Vancouver, Canada; New York, US; London, UK; Johannesburg, South Africa;
Melbourne, Australia.
Highlights
* Fully funded all-cash offer of US$130 per share for PotashCorp
* Represents a 20 per cent premium to the closing price of PotashCorp on 11
August 2010
* Consistent with BHP Billiton`s strategy of adding Tier 1 assets and
further diversification
* Accelerates BHP Billiton`s entry into the fertilizer industry
* Significant benefits to Saskatchewan, New Brunswick and Canada
BHP Billiton (ASX:BHP/LSE:BLT/NYSE:BHP and BBL/JSE:BIL) today announced its
intention to make an all-cash offer to acquire all of the issued and
outstanding common shares of Potash Corporation of Saskatchewan Inc.
("PotashCorp") (NYSE:POT/TSX:POT), at a price of US$130 in cash per
PotashCorp common share (the "Offer"). The Offer values the total equity
of PotashCorp at approximately US$40 billion on a fully-diluted basis.
The acquisition will accelerate BHP Billiton`s entry into the fertilizer
industry and is consistent with the company`s strategy of becoming a
leading global miner of potash. PotashCorp`s potash mining operations are
a natural fit with BHP Billiton`s greenfield land holdings in Saskatchewan,
Canada.
Compelling Offer to PotashCorp Shareholders
The Offer represents an attractive premium of 20 per cent to the closing
price of PotashCorp`s shares on the NYSE on 11 August 2010, the day prior
to BHP Billiton`s first approach to PotashCorp. It is also a premium of 32
per cent and 33 per cent to the volume weighted average trading prices of
PotashCorp`s shares on the NYSE for the 30-trading day and the 60-trading
day periods ended on the same date, respectively. The Offer is fully
funded and provides PotashCorp shareholders with immediate liquidity and
certainty of value regarding the company`s growth potential in the face of
volatile equity markets.
On 12 August 2010, BHP Billiton Chief Executive Officer Marius Kloppers
made a proposal to PotashCorp`s President and Chief Executive Officer, Mr
William J. Doyle, to combine the two companies in which PotashCorp
shareholders would receive US$130 in cash per PotashCorp common share. Mr
Kloppers was advised by Mr Doyle that PotashCorp was not for sale and had
no interest in discussing a combination at this time.
Subsequently, on 13 August 2010, BHP Billiton Chairman Jac Nasser
reiterated the proposal in a letter to Mr Dallas J. Howe, the PotashCorp
Board Chair, requesting a response from the PotashCorp Board by 18 August
2010. On 17 August 2010, Mr Howe advised Mr Nasser by letter that the Board
of Directors of PotashCorp unanimously rejected BHP Billiton`s proposal,
and PotashCorp made BHP Billiton`s proposal and PotashCorp`s response
publicly available. Notwithstanding PotashCorp`s current position, BHP
Billiton would welcome the opportunity to work with PotashCorp to achieve a
successful outcome to this transaction.
Commenting on the Offer, Mr Nasser said "We firmly believe that PotashCorp
shareholders will find the certainty of a cash offer, at a premium of 32
per cent to the 30-trading day period average, very attractive and we have
therefore decided to make this Offer directly to those shareholders".
Consistent with BHP Billiton`s Strategy
The acquisition of PotashCorp is consistent with BHP Billiton`s strategy of
developing, owning and operating a diversified portfolio of large, low-
cost, long-life, expandable, export-oriented, Tier 1 assets. PotashCorp
will provide BHP Billiton with an immediate leadership platform in the
global fertilizer industry and further diversify BHP Billiton`s portfolio
of Tier 1 assets. In addition, the acquisition leverages BHP Billiton`s
global capability and experience in building, operating and expanding
mining operations.
Furthermore, BHP Billiton believes that the proposed acquisition will be
earnings per share accretive in the second full fiscal year following
consolidation.
Commenting further on the Offer, Mr Kloppers said "This is an exciting
opportunity to acquire a portfolio of Tier 1 assets. It accelerates our
stated strategy of becoming a leading global potash producer and further
diversifies our portfolio by commodity, geography and customer."
Benefits to Canada
BHP Billiton is committed to being a strong corporate citizen in
Saskatchewan, New Brunswick and Canada and, in that regard, is prepared to
make appropriate undertakings as part of its submission to Investment
Canada. Amongst these is BHP Billiton`s intention to establish a global
potash business in Canada and to base the President and management of the
Canadian potash operations in Saskatchewan.
BHP Billiton plans to maintain current levels of employment at PotashCorp`s
Saskatchewan and New Brunswick operations for the foreseeable future. BHP
Billiton also intends to identify and propose a Canadian nominee to stand
for election to the BHP Billiton Board.
BHP Billiton recognizes the significant and unique capabilities of
PotashCorp`s businesses and its employees and is firmly committed to
ensuring that PotashCorp`s businesses continue to play leading roles in the
global fertilizer industry. Towards this end, BHP Billiton intends to
continue PotashCorp`s planned and previously announced capital programs. In
addition, BHP Billiton will continue to progress its plans to develop its
Jansen greenfield potash project.
BHP Billiton is committed to strong community relations and intends to
bring PotashCorp`s spending commitments on community programs in line with
BHP Billiton`s global commitment levels. BHP Billiton`s policy is to spend
1 per cent of Profit Before Tax, on a 3 year rolling average basis, on
community programs.
BHP Billiton has had business interests in Canada for almost 40 years, the
most significant of which has been EKATI in the Northwest Territories - one
of the world`s premier diamond mines. BHP Billiton has invested
approximately US$5 billion in Canada since EKATI began production in 1998.
In recent years, BHP Billiton has acquired exploration rights in the
Saskatchewan potash basin.
About the Offer
BHP Billiton plans to formally commence its Offer by way of newspaper
advertisement on 20 August 2010. The Offer will be open for acceptance
until 11:59 p.m. (EDT) on 19 October 2010, unless the Offer is extended at
the sole discretion of BHP Billiton.
The Offer will be subject to certain conditions, including, without
limitation, that the PotashCorp shares tendered under the Offer, together
with any PotashCorp shares owned by BHP Billiton upon expiry of the Offer,
constitute more than 50 per cent of the shares of PotashCorp then
outstanding, on a fully-diluted basis. The Offer will also be conditional
upon the recently-adopted PotashCorp shareholder rights plan being
terminated or determined to be ineffective, receipt of all necessary
regulatory approvals, no material adverse change in PotashCorp and other
conditions customary for transactions of this nature. The Offer is not
subject to any financing condition or BHP Billiton shareholder approval.
Full details of the Offer will be included in the formal offer and take-
over bid circular to be publicly filed and subsequently mailed to
PotashCorp`s shareholders. BHP Billiton is requesting a list of
PotashCorp`s shareholders and expects to mail the formal offer and take-
over bid circular to PotashCorp`s shareholders as soon as possible
following receipt of the shareholder list.
Transaction Financing
BHP Billiton estimates the total amount of funds required to consummate the
Offer is approximately US$43 billion (including funds required to repay or
refinance certain existing PotashCorp indebtedness if necessary). BHP
Billiton has arranged a new multi-currency term and revolving facility
agreement entered into for the purpose, among other things, of meeting the
funding requirements of the transaction. The terms of the facility will
include various representations and warranties, affirmative and negative
covenants, and events of default customary for credit facilities of this
type.
The acquisition financing facility will preserve BHP Billiton`s financial
flexibility. BHP Billiton remains committed to maintaining a solid A
credit rating and a progressive dividend policy.
About BHP Billiton
BHP Billiton is the world`s largest diversified natural resources company
with approximately 41,000 employees working in more than 100 operations in
25 countries. BHP Billiton has significant positions in major commodity
businesses, including aluminum, energy coal and metallurgical coal, copper,
manganese, iron ore, uranium, nickel, silver and titanium minerals, and has
substantial interests in oil, gas, liquefied natural gas and diamonds.
BHP Billiton has a market capitalization of approximately US$188 billion
(as at 16 August 2010).
BHP Billiton was created through the dual listed companies (DLC) merger of
BHP Limited (now BHP Billiton Limited) and Billiton Plc (now BHP Billiton
Plc), which was concluded on 29 June 2001. BHP Billiton Limited and BHP
Billiton Plc continue to exist as separate companies, but operate on a
combined basis as BHP Billiton and retain their respective listings on the
Australian and London stock exchanges. Both companies have identical
boards of directors and are run by a unified management team. Shareholders
in each company have equivalent economic and voting rights in BHP Billiton
as a whole. The global headquarters of the combined BHP Billiton are
located in Melbourne, Australia.
BHP Billiton has engaged J.P. Morgan Securities Inc., TD Securities, Banco
Santander, Barclays Capital (the investment banking division of Barclays
Plc), BNP Paribas and The Royal Bank of Scotland Group Plc as financial
advisors in connection with this Offer. Its legal advisors are Blake,
Cassels & Graydon LLP in Canada and Cleary Gottlieb Steen & Hamilton LLP in
the United States.
About PotashCorp
PotashCorp is the world`s largest integrated fertilizer and related
industrial and feed products company and the largest producer of potash
worldwide by capacity. In 2009, PotashCorp estimated its potash operations
represented 11% of global production and 20 per cent of global potash
capacity. PotashCorp owns and operates five potash mines in Saskatchewan
and one in New Brunswick. PotashCorp also holds mineral rights at the
Esterhazy mine in Saskatchewan where potash is produced under a mining and
processing agreement with a third party.
PotashCorp`s phosphate operations include the manufacture and sale of solid
and liquid phosphate fertilizers, animal feed supplements and industrial
acid, which is used in food products and industrial processes. PotashCorp
has an integrated phosphate mine and processing plant in North Carolina, a
phosphate mine and two mineral processing plant complexes in northern
Florida and six phosphate feed plants in the United States. PotashCorp can
also produce a variety of phosphate products at its Geismar facility in
Louisiana.
PotashCorp`s nitrogen operations involve the production of nitrogen
fertilizers and nitrogen feed and industrial products, including ammonia,
urea, nitrogen solutions, ammonium nitrate and nitric acid. PotashCorp has
nitrogen facilities in Georgia, Louisiana, Ohio and Trinidad.
For the year ended 31 December 2009, PotashCorp had audited consolidated
revenues of US$3,977 million (2008: US$9,447 million), EBITDA of US$1,504
million (2008: US$4,963 million) and profit before taxation of US$1,071
million (2008: US$4,572 million). As at 31 December 2009 PotashCorp had
audited gross assets of US$12,922 million and net assets of US$6,501
million. The PotashCorp financial information presented above has been
extracted without amendment from published financial reports which are
presented in US dollars and prepared under Canadian Generally Accepted
Accounting Principles.
Additional Information
IMPORTANT INFORMATION:
The Offer will be made by BHP Billiton Development 2 (Canada) Limited (the
"Offeror"), an indirect wholly-owned subsidiary of BHP Billiton Plc. This
announcement is for information purposes only and does not constitute or
form part of any offer to purchase or any solicitation of any offer to sell
PotashCorp`s common shares. The Offer (as the same may be varied or
extended in accordance with applicable law) will be made exclusively by
means of, and subject to the terms and conditions set out in, the offer and
the circular, the letter of transmittal, the notice of guaranteed delivery
and other related tender offer materials (the "Offer Materials").
In connection with the Offer, the Offeror, BHP Billiton Limited and BHP
Billiton Plc will file with the Canadian securities regulatory authorities
the Offer Materials and will file with the U.S. Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule TO (the
"Schedule TO"), including the Offer Materials.
THE OFFER MATERIALS AND THE SCHEDULE TO, AS THEY MAY BE AMENDED FROM TIME
TO TIME, WILL CONTAIN IMPORTANT INFORMATION, INCLUDING THE TERMS AND
CONDITIONS OF THE OFFER, THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER. INVESTORS AND SECURITY HOLDERS WILL BE
ABLE TO OBTAIN A FREE COPY OF THE OFFER MATERIALS AND OTHER DOCUMENTS FILED
BY THE OFFEROR, BHP BILLITON LIMITED AND BHP BILLITON PLC WITH THE SEC AT
THE WEBSITE MAINTAINED BY THE SEC AT WWW.SEC.GOV AND WITH THE CANADIAN
SECURITIES REGULATORY AUTHORITIES AT WWW.SEDAR.COM. MATERIALS FILED WITH
THE SEC OR THE CANADIAN SECURITIES REGULATORY AUTHORITIES WILL BE ABLE TO
BE OBTAINED WITHOUT CHARGE AT BHP BILLITON`S WEBSITE, WWW.BHPBILLITON.COM,
OR BY CONTACTING THE INFORMATION AGENTS FOR THE TENDER OFFER, MACKENZIE
PARTNERS, INC. AND KINGSDALE SHAREHOLDER SERVICES INC., BY PHONE AT 1-800-
322-2885 and 1-866-851-3215 RESPECTIVELY, OR BY EMAIL AT
potash@mackenziepartners.com AND contactus@kingsdaleshareholder.com
RESPECTIVELY.
While the Offer will be made to all holders of PotashCorp common shares,
the Offer will not be made or directed to, nor will deposits of PotashCorp
common shares be accepted from or on behalf of, holders of PotashCorp
common shares in any jurisdiction in which the making or acceptance of the
Offer would not be in compliance with the laws of such jurisdiction.
However, the Offeror may, in its sole discretion, take such action as it
may deem necessary to extend the Offer in any such jurisdiction.
This announcement contains information, including information relating to
PotashCorp, that has been derived from publicly available sources that have
not been independently verified. No representation or warranty is made as
to the accuracy, completeness or reliability of such information.
Cautionary Statement Regarding Forward-Looking Statements
This announcement may contain, in addition to historical information,
certain forward-looking statements. Often, but not always, forward looking
statements can be identified by the use of words such as "plans",
"expects", "expected", "scheduled", "estimates", "intends", "anticipates",
or "believes", or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might" or
"will" be taken, occur or be achieved. Such forward looking statements are
subject to known and unknown risks, uncertainties and other factors that
could cause actual results, performance or achievements of the Offeror and
BHP Billiton to differ materially from any future results, performance or
achievements expressed or implied by such forward looking statements,
including the risk that all conditions of the Offer will not be satisfied.
Many of these risks and uncertainties relate to factors that are beyond BHP
Billiton`s ability to control or estimate precisely, such as future market
conditions, changes in regulatory environment and the behavior of other
market participants. BHP Billiton cannot give any assurance that such
forward-looking statements will prove to have been correct. The reader is
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this announcement. BHP Billiton
disclaims any intention or obligation to update or revise any forward-
looking statements, whether as a result of new information, future events
or otherwise, except as required by applicable law.
Nothing contained herein shall be deemed to be a forecast, projection or
estimate of the future financial performance of any member of the BHP
Billiton Group, PotashCorp or the enlarged BHP Billiton Group following
completion of the Offer unless otherwise stated.
PotashCorp Financial Information
PotashCorp results are presented in U.S. dollars and have been prepared in
accordance with Canadian GAAP. In PotashCorp`s financial statements,
EBITDA excludes the effects of items which primarily reflect the impact of
long-term investment decisions. EBITDA has not been adjusted for the non-
cash effects of the following items: (recovery) impairment of auction rate
securities and gain on sale of assets. Financial information relating to
PotashCorp has been extracted from PotashCorp`s financial statements
without adjustment.
Conference Call
BHP Billiton will hold an analyst and investor conference call today at
8:00 am Canadian/US Eastern Daylight Time, 1:00 pm British Summer Time and
10:00 pm Australian Eastern Standard Time. Instructions for participation
are on our website, www.bhpbilliton.com, under Investor Relations.
Australia - 1800 822 994
UK - 0808 238 9064
USA & Canada - 1888 379 9511
International - +1 412 3176789
Further information on BHP Billiton can be found on our Internet site:
www.bhpbilliton.com
Australia United Kingdom & South Africa
Amanda Buckley, Media Relations Andre Liebenberg, Investor
Tel: +61 3 9609 2209 Mobile: Relations
+61 419 801 349 Tel: +44 20 7802 4131
email: Mobile: +44 7920 236 974
Amanda.Buckley@bhpbilliton.com email:
Andre.Liebenberg@bhpbilliton.
com
Kelly Quirke, Media Relations Illtud Harri, Media Relations
Tel: +61 3 9609 2896 Mobile: Tel: +44 20 7802 4195
+61 429 966 312 Mobile: +44 7920 237 246
email: email:
Kelly.Quirke@bhpbilliton.com Illtud.Harri@bhpbilliton.com
Fiona Martin, Media Relations Americas
Tel: +61 3 9609 2211 Mobile: Scott Espenshade, Investor
+61 427 777 908 Relations
email: Tel: +1 713 599 6431
Fiona.Martin2@bhpbilliton.com Mobile: +1 713 208 8565
email:
Scott.Espenshade@bhpbilliton.
com
Leng Lau, Investor Relations Ruban Yogarajah, Media
Tel: +61 3 9609 4202 Mobile: Relations
+61 403 533 706 Tel: US +1 713 966 2907 or UK
email: +44 20 7802 4033Mobile: UK
Leng.Y.Lau@bhpbilliton.com +44 7827 082 022
email:
Brendan Harris, Investor Ruban.Yogarajah@bhpbilliton.c
Relations om
Tel: +61 3 9609 4323 Mobile:
+61 437 134 814
email:
Brendan.Harris@bhpbilliton.com
BHP Billiton Limited ABN 49 004 BHP Billiton Plc Registration
028 077 number 3196209
Registered in Australia Registered in England and
Registered Office: 180 Lonsdale Wales
Street Registered Office: Neathouse
Melbourne Victoria 3000 Place
Australia London SW1V 1BH United
Tel +61 1300 55 4757 Fax +61 3 Kingdom
9609 3015 Tel +44 20 7802 4000 Fax +44
20 7802 4111
Members of the BHP Billiton group which is headquartered in
Australia
Date 18 August 2010
Date: 18/08/2010 09:14:02 Produced by the JSE SENS Department.
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