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UPDATE 2-Potash Corp to split stock, raise cash dividend
January 27, 2011 / 2:48 AM / 7 years ago

UPDATE 2-Potash Corp to split stock, raise cash dividend

* Says board has approved a 3-for-1 stock split

* Stock split to help boost trading liquidity

* Move seen as sign of confidence in potash business

* Share price has jumped since failed takeover in November (Adds analyst comment, details; Figures in U.S. dollars)

By Euan Rocha

TORONTO, Jan 26 (Reuters) - Potash Corp (POT.TO), the world’s largest fertilizer producer, said on Wednesday its board approved a three-for-one split of its common shares in a move to improve trading liquidity following a recent jump in the stock price.

Potash Corp, the target of a failed $39 billion takeover bid last year, will also raise its quarterly cash dividend from 10 cents to 21 cents a share on a pre-split basis. On a post-split basis the payout will equal 7 cents a share.

“This should definitely be regarded as positive because it is a sign that the company believes in the long-term strength of the potash business,” said Gleacher & Co. analyst Edlain Rodriguez.

The company is the No. 1 producer of the crop nutrient potash, a mineral that comes from underground mines in the Canadian province of Saskatchewan. The outlook for potash and other fertilizers is at the strongest in years as farmers rush to maximize yields whle grain prices are at fresh highs.

Shares of Potash Corp recently hit a 28-month high of $174.31 in New York. That compares with $130 offered last summer by BHP Billiton (BHP.AX), the mining giant who’s hostile bid was blocked by Canada’s government in November.

The shares, which closed at $168.62 on Wednesday, have climbed steadily since the failed takeover. The gains reflect the company’s strong performance at the end of 2010 and even more robust expectations for the coming year.

Potash Corp is expected to post a big jump in profits when it reports fourth-quarter results early on Thursday, as surging grain prices have helped boost demand across the globe. [ID:nN25185681]

STOCK DIVIDEND TO SHAREHOLDERS

The company said it will pay out the three-for-one stock split to shareholders in the form of a stock dividend, with each receiving two additional shares for each share owned on the record date of Feb. 16. The plan is subject to regulatory approval.

Rodriguez said the split, which effectively lowers the price of a single share, would attract more retail investors to the stock.

Upon completion of split the number of shares outstanding will total about 853 million.

The stock split will have no unfavorable tax consequences in either Canada, or the United States, the company said. (Reporting by Euan Rocha; Editing by Frank McGurty)

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