TORONTO (miningweekly.com) – BHP Billiton will make all-cash offer directly to Potash Corp shareholders at $130 a share, after the Canadian firm's board rejected the advances of the world's biggest mining company.

The decision, announced on Wednesday, will surprise some analysts and investors, as BHP had been expected to raise its offer after Potash Corp shares jumped to some $143 a share on Tuesday, well above the offer price.

But the group said that the $130 a share offer represents a 20% premium to the closing price of Potash Corp on August 11, the day before BHP CEO Marius Kloppers met his Potash Corp counterpart to inform him of the proposal.

"The acquisition of Potash Corp 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," BHP said in a statement.

"Potash Corp will provide BHP Billiton with an immediate leadership platform in the global fertiliser industry and further diversify BHP Billiton’s portfolio of Tier 1 assets."

Shareholders in both companies first heard of the offer on Tuesday, when Potash Corp, which describes the price as “grossly inadequate”, went public with its rejection of BHP's offer.

Potash Corp has refused to enter into negotiations with BHP, and also announced on Tuesday it has adopted a shareholder rights plan, or 'poison pill'.

The company is the world's top potash producer, and also produces nitrogen and phosphates products.

Potash Corp CEO Bill Doyle said that BHP was trying to take advantage of an “anomaly” in the company's market value, as demand for its products had only recently begun to recover after the global downturn.

He commented that the offer was only a 16% premium to the Saskatchewan-based firm's closing price on Monday, saying that he was not opposed to a sale of the company, but was opposed to a "steal".

But BHP pointed out on Wednesday that it was in fact also a premium of 32% to the volume-weighted average trading prices of Potash Corp’s shares on the NYSE for the 30-trading day period ending on August 11.

The offer will be formerly launched on August 20, and will remain open until October 19.

BHP Billiton expects it will need a total of about $43-billion to complete the acquisition, including repaying or refinancing some Potash Corp debt "if neccessary".

The miner 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".

BHP said it wants at least 50% of Potash Corp shares.

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