PotashCorp is promising to relocate its top executives to Saskatchewan, a guarantee BHP Billiton dismissed as a copy-cat move in an attempt to curry favour during an increasingly bitter takeover battle.
Potash Corp. of Saskatchewan (TSX:POT), which is the target of a US$38.6-billion hostile takeover bid by BHP, promised Wednesday that it will relocate its CEO, chief financial officer, president and other top executives to the province from Chicago.
“Just as we are renewing our mining operations, we are renewing our commitment to the province of Saskatchewan and all stakeholders,” CEO Bill Doyle said in a news release.
Saskatchewan Premier Brad Wall called the promise “encouraging.”
“All of the senior officers should be in the province of Saskatchewan if it’s a head office. I think that makes a lot of sense,” he said Wednesday in Regina.
BHP has already promised to make Saskatoon the headquarters of its global potash business if it successfully acquires PotashCorp, bringing 300 new head office jobs to the province, including the head of BHP’s potash operations, its chief financial officer, chief legal counsel and vice-president of human resources.
The company reiterated its promise Wednesday and said PotashCorp’s promise “is clearly in response to BHP Billiton’s public commitments.”
“Under BHP Billiton, the global potash team including its president would live, work, pay taxes and raise their families in Saskatchewan, as well as maintaining a residence in the province,” BHP spokesman Ruban Yogarajah said in a statement.
PotashCorp is headquartered in Saskatoon and employs about 200 people at its head office there, but the company’s top executives live and work in Chicago. A recent report by the Conference Board of Canada pointed out that the company’s stock is majority-owned by non-Canadians and Saskatchewan shareholders constitute “a relatively small fraction of total ownership.” While the board of directors is mostly Canadian, most of PotashCorp’s senior managers are American.
PotashCorp spokesman Bill Johnson said the company would continue to run its multibillion-dollar nitrogen and phosphate businesses out of Chicago.
The promise by PotashCorp appears to be part of the company’s ongoing effort to convince the province and the federal government that a BHP takeover would not be a net benefit to Canada — a key factor that must be met if the bid is to be approved by Ottawa.
Wall, who is advising the federal government, reiterated Wednesday that he doesn’t think a BHP takeover would benefit Canadians.
“What’s the impact on jobs in our province, on Saskatchewan families, both from a production standpoint and corporate jobs? What’s the impact on our revenue for the government of Saskatchewan and therefore the people of the province? And what’s the impact on the strategic position or the overall economic strength of Saskatchewan for years to come? Those are the important questions,” he said.
PotashCorp has said BHP’s offer of $130 per share significantly undervalues the company. It has been working to put together a competing bid, potentially with state-owned Chinese company Sinochem or a consortium involving Canadian pension funds.
In a letter sent to employees Tuesday, Doyle urged governments to allow more time for competing bids to emerge.
“As you may know, we are evaluating several alternatives for our company — a process that is active and ongoing,” Doyle wrote.
“As we work through the process, we believe it is critically important for both the provincial and federal governments to understand that the interests of PotashCorp shareholders and the citizens of Saskatchewan and Canada will be best served if alternatives are allowed to emerge.”
PotashCorp also promised Wednesday to remain in export marketing cartel Canpotex, guaranteeing “strong continuing provincial revenues.”
“We believe these practices and a commitment by any bidder to endorse them will serve the best interests of the province of Saskatchewan and PotashCorp stakeholders,” the company said.
BHP has been unclear on its intentions with regard to Canpotex and has hinted more than once that it prefers to sell its products on the open market.
In its pledge, PotashCorp also promised to be “the No. 1 corporate citizen in Saskatchewan in terms of philanthropic giving,” to commit to a local spending target of at least 60 per cent, to stick to a plan to spend $5.7 billion to expand its Saskatchewan potash assets between 2005 and 2014 and to develop a strong aboriginal workforce.
A group of First Nations chiefs said Tuesday they plan to seek a court injunction to stop BHP’s bid until they’re given a say in its outcome.
“We need certainty in this province. We need jobs and employment and wealth creation. Everything is happening around us without our involvement so things are going to change,” Guy Lonechild, chief of the Federation of Saskatchewan Indian Nations, said Wednesday.
He added that he wants the province to engage aboriginal groups in “meaningful negotiations” on resource sharing in the potash sector, and said a court injunction is only one option.
“If our voice continues to be unheard by the province then we’ll take action. That’s the bottom line. Action means action. Not just political action or court action but other types of action.”
PotashCorp is the world’s largest producer of potash — a nutrient used to promote crop growth — with about 20 per cent of the world’s production capacity.
Shares in PotashCorp lost 31 cents to C$148.70 Wednesday on the Toronto Stock Exchange.