DBRS Places Potash Under Review – Developing Following BHP Billiton Offer to Acquire Potash

DBRS has today placed the BBB (high) Senior Unsecured Debt rating and the R-1 (low) Commercial Paper rating of Potash Corporation of Saskatchewan Inc. (Potash or the Company) Under Review with Developing Implications following the Company’s announcement that it has received an unsolicited proposal from BHP Billiton Ltd. (BHP Billiton – rated AA (low) by DBRS) to acquire the Company for cash at a price of $130 per share (approximately $38.5 billion). Potash’s board of directors has unanimously rejected the proposal and the Company has adopted a shareholder rights plan, subject to Toronto Stock Exchange acceptance.

BHP Billiton has confirmed that it has approached Potash regarding a possible acquisition of Potash. DBRS views that BHP Billiton has the financial resources to pursue the acquisition and that Potash’s fertilizer businesses fit within BHP Billiton’s business profile. The successful acquisition of Potash by BHP Billiton would likely have a positive impact on the rating of any Potash debt that might remain outstanding after an acquisition given that BHP Billiton’s current rating is higher than Potash’s.

Nonetheless, Potash has rejected the BHP Billiton proposal; however, different proposals may potentially arise from BHP Billiton or other players. Accordingly, DBRS is placing Potash’s ratings Under Review with Developing Implications pending further clarity on the course of the Company’s future.

The final terms of any potential transaction will determine whether a DBRS rating action is warranted.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Mining, which can be found on our website under Methodologies.