BHP Buyback Would Be Better for Investors Than Potash Deal, Citigroup Says |
| Bloomberg - Aug 20, 2010 |
BHP Billiton Ltd. investors would get higher free cash flow per share from a stock buyback than the company’s proposed acquisition of Potash Corp. of Saskatchewan Inc., Citigroup Inc. said.
Buying Potash for an assumed $145 a share, compared with BHP’s current hostile bid of $130, would be “dilutive,” Citigroup analysts led by Heath R. Jansen in London said in a report yesterday. When comparing a stock buyback of equivalent value to the Potash deal and funded on the same borrowing terms, free cash per share is higher with the share repurchase, Jansen said. Free cash flow is cash from operations left over after capital expenditures.
“The optimum scenario according to our calculations is a buyback,” Jansen said.
BHP, the world’s largest mining company, took its $40 billion cash bid directly to Saskatoon, Saskatchewan-based Potash Corp. investors on Aug. 18 after the producer of crop nutrients rejected the proposal and said it was “grossly inadequate.”
Read Full Article from Bloomberg
- Posted: 2010-08-20 22:13:24
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