BHP Billiton head office in Melbourne.MICK TSIKAS
BHP Billiton Ltd. is asking a United States court to throw out a lawsuit filed by its takeover target Potash Corp. of Saskatchewan Inc., calling allegations that it misled investors "uncorroborated and largely irrelevant speculation."
In court documents filed Friday in a U.S. District Court in Illinois, BHP said Potash Corp. has failed to provide any evidence to back up its accusations and, while the company has a right to dispute facts with the bidder, "in the end, once both sides' positions are in the public domain, it is up to the shareholders, rather than the court, to resolve the dispute."
Potash Corp. launched a lawsuit late last month seeking to stop BHP $38.6-billion (U.S.) hostile bid until it corrects "false and misleading" statements that allegedly drove down the price of the stock to help it try to win control of the company at a lower price.
In particular, the Potash Corp. lawsuit points to BHP's decision to start developing the Jansen mine in Saskatchewan and run it at full capacity as a ploy to drive down the global price of the crop nutrient and scare off investors.
Potash Corp. - which has rejected BHP's bid as too cheap and opportunistic - also accuses BHP in the lawsuit of attempting to confuse the market about its plans to pull out of the powerful Canpotex potash marketing arm, and a possible sale of the nitrogen and phosphate divisions.
"PCS's complaint offers only implausible, uncorroborated and largely irrelevant speculation, drawn from material in the public record, which shareholders are equally able to review in order to draw their own conclusions," BHP said in its motion to dismiss the suit filed on Friday.
On Canpotex in particular, BHP claims it has been clear that it plans to work with the cartel's other shareholders - Calgary-based Agrium and Minnesota-based Mosaic Co. - to better understand the business and prevent supply disruption as it works towards marketing potash on its own.
"There is no reason to believe that BHP Billiton, which is the eighth-largest corporation in the world, would act in a way that is economically irrational," BHP states in the court documents.
As for the claim that BHP had plotted to drive down prices, BHP responded saying that Potash Corp. told its own shareholders the stock was "temporarily depressed, not by the prospect of competition from BHP Billiton's new mine, but rather as a result of 'an unprecedented demand decline associated with the global downturn'."
Potash Corp. declined to comment Friday on BHP's motion to dismiss its legal action.
Meantime, Saskatoon-based Potash Corp. had asked the courts to force BHP to hand over documents detailing its actions leading up to the Australian miner's bid.
BHP tried to have that motion thrown out earlier this week, calling it a "fishing expedition" to gain competitive insight, but was unsuccessful when the court ruled that the documents should be handed over.
However, the court ruled the scope of documents requested by Potash Corp. had to be narrowed down. Lawyers on both sides came to an agreement on Friday on which documents will be handed over, and the procedures and timelines for other parts of the discovery process, including depositions.
Meanwhile, Potash Corp. remains in discussions to come up with an alternative bid to trump BHP's hostile offer after chief executive officer Bill Doyle told shareholders recently that "BHP will not be the only bidder."
A Chinese-led consortium bid or the purchase of a major stake in Potash Corp. are considered to be the Saskatoon company's most likely defence to trump BHP's offer.
Chemical conglomerate Sinochem Group is considered the lead contender for a possible Chinese bid. Sinochem is the parent of China's largest fertilizer firm, Sinofert, in which Potash Corp. has a 22 per cent stake.