JOHANNESBURG AND TORONTO (miningweekly.com) – Potash Corporation of Saskatchewan has received and rejected a $130-a-share takeover offer from diversified mining group BHP Billiton, it announced on Tuesday.

The world's largest potash producer described BHP Billiton's cash offer as "grossly inadequate" and said that it was not in the best interest of its shareholders to enter into discussions with the global miner.

BHP confirmed the offer separately, and said that Potash Corp's board had not agreed to enter talks.

"BHP Billiton continues to review its options and will make a further announcement in due course," the company said.

Chairperson Dallas Howe said that the Potash Corp board believed that the BHP Billiton proposal "substantially undervalued" the company and that it failed to reflect the value of its premier position in the industry and its future growth prospects.

"The fertiliser industry is emerging from the recent global economic downturn, and we feel strongly that PotashCorp shareholders should benefit from the current and potential value of the company. We believe the BHP Billiton proposal is an opportunistic effort to transfer that value to its own shareholders," he stated.

The company's board reviewed the proposal with the assistance of its independent financial and legal advisers.

Potash Corp also said on Tuesday that it has adopted a shareholder rights plan, that would give the directors time to evaluate a formal takeover bid, and to explore other transactions that could offer better value for shareholders.

Demand for crop nutrients, and potash in particular, fell sharply after the financial crisis, as farmers postponed the use of fertiliser.

Producers, including Potash Corp, were caught off guard by how long it took buyers to return to the market, but Doyle said last month that potash buyers in most regions were purchasing volumes at “near pre-recession levels".

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.