Potash Corp., the world’s biggest fertilizer company and one of Canada’s largest corporations, is under siege from Australian resources giant BHP Billiton, which has launched a $38.6-billion hostile takeover bid.

Saskatchewan-based Potash immediately rejected the offer, calling it “grossly inadequate.”

The bid “substantially undervalues Potash Corp. and fails to reflect both the value of our premier position in a strategically vital industry and our unparallelled future growth prospects,” Potash Corp. chairman Dallas J. Howe said in a rejection letter.

BHP is offering $130 a share in cash for Potash, or a 16% premium to the company’s closing share price on Monday.

“This low premium does not reflect the strategic importance, scarcity value and quality of Potash Corp.'s assets, or the unique opportunity Potash Corp. affords to BHP Billiton or any other acquirer,” the letter said. “Furthermore, the premium offered is substantially inferior even to average control premiums globally and in Canada.”

The BHP Billiton bid comes just two days after fellow North American potash giant Agrium offered to buy Australian wheat company AWB. It comes as fertilizer demand is beginning to recover after the 2008 slump.

Source: http://www.torontosun.com/money/2010/08/17/15048091.html