With BHP Billiton’s takeover bid off the table and its shares down about US$19 from their late-August peak, PotashCorp has launched a program to buy back about five per cent of its common stock.
The Saskatoon-based fertilizer giant on Tuesday announced a share repurchase program, due to begin Thursday with a budget of up to US$2 billion.
While the program is officially scheduled to wrap up no later than Nov. 17, 2011, the company said it intends to complete its share repurchases by the end of this year.
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Based on its closing price on the New York Stock Exchange (NYSE) on Monday, Potash said it could buy back about 4.9 per cent of its public float, or 14.57 million common shares, for its $2 billion.
PotashCorp shares closed Tuesday on the NYSE at US$134.63, down from their 52-week high of US$153.29.
That high was reached Aug. 23, about a week after Australian/British mining giant BHP Billiton confirmed it had approached PotashCorp with a US$130-per-share takeover bid.
Billiton walked away from its bid Sunday, citing the federal government’s preliminary opinion on Nov. 3 that a Billiton takeover of PotashCorp would not be of net benefit to Canada.
PotashCorp said Tuesday it would purchase its shares on open markets such as the NYSE or TSX, and cancel the shares repurchased under the program.
Share repurchase programs allow a publicly traded company to reduce the number of available outstanding shares, a move which usually boosts the market for the company’s remaining stock.
Although PotashCorp gave no specific reasons in its release Tuesday, such programs are usually undertaken by companies that believe their shares to be undervalued.
While Billiton’s US$38.6 billion hostile bid was active, PotashCorp dismissed it as “grossly inadequate” and an attempt to snap up PotashCorp for “significantly less than its intrinsic value.”
That said, although a number of suitors were rumoured to have considered outbidding Billiton for PotashCorp, no rival bid ever officially appeared.
