* Court to allow the discovery process to proceed
* Court to rule on preliminary injunction on Nov. 4
(Adds details on lawsuit, BHP comment, Potash Corp comment and
share price move)
By Eric Johnson and Euan Rocha
CHICAGO/TORONTO, Sept 27 A U.S. federal judge
said on Monday he would allow the discovery process to proceed
in a lawsuit filed by Potash Corp (POT.TO) to fend off BHP
Billiton's (BHP.AX) $39 billion hostile takeover bid.
The lawsuit, filed last week in a U.S. District Court in
Chicago, alleges that BHP misrepresented material facts related
to its bid for the world's largest producer of potash -- a key
Lawyers said the court's ruling was not unexpected and that
Potash Corp would likely file an amended complaint, as the
discovery process continues to move forward.
"I would expect that discovery is likely to lead to an
amended complaint and new allegations of disclosure
violations," said John Coffee, a professor at Columbia Law
School in New York.
Saskatoon, Saskatchewan-based Potash Corp have flatly
rejected BHP's bid as "grossly inadequate." The company has
said that it has been approached by other parties that are
interested in tabling alternative proposals and that BHP's
offer had "no traction whatsoever" with shareholders.
Full coverage of BHP's bid for Potash [ID:nN22340110]
Scenarios for Potash [ID:nN24267706]
Graphic on potash: link.reuters.com/sum65n
Deal calculator: r.reuters.com/ruv65n
As part of the discovery process, Potash Corp have asked
that BHP produce a long list of documents that include BHP's
statements regarding investments in the potash industry and the
minutes of BHP's board meetings that relate to the potash
sector. BHP was also asked to provide any documents on its
plans to develop its Jansen potash project in Saskatchewan.
The company has also requested that some of BHP's top
executives present depositions in relation to the matter.
"I have read the motion and read the responses, unless BHP
is prepared to extend the tender date, I am not going to stay
discovery," said Judge David Coar, in response to BHP's request
that expedited discovery be denied.
Judge Coar said that the court would conduct a hearing on
Potash Corp's request for a preliminary injunction to block BHP
from proceeding with its tender offer on Nov. 4, ahead of the
Nov. 18 deadline on BHP's bid.
"We are pleased that the court has scheduled a hearing on
November 4, well in advance of the November 18 scheduled
expiration of our offer. We are gratified that the court made
clear that the Potash Corp of Saskatchewan Inc discovery
proposals are excessively broad," said BHP in a statement.
BHP also noted that today's ruling did not address the
sufficiency of the complaint or the merits of the case. The
world's largest reiterated that it intends to "vigorously"
contest the lawsuit.
A spokesman for Potash Corp declined to comment on today's
outcome, but stated that the judge's ruling speaks for itself.
An attorney representing BHP in the matter told the court
that the Anglo-Australian miner intends to file a motion to
dismiss the lawsuit.
Shares of Potash Corp were up 85 cents at $146.85 in
afternoon trade on the Toronto Stock Exchange.
The case is Potash Corp v. BHP Billiton in the U.S.
District Court for the Northern District of Illinois Eastern
Division, No. 1:10-cv-06024.
(Reporting by Eric Johnson in Chicago; Writing by Euan Rocha)