Investors of Potash Corp./Saskatchewan (USA) (NYSE:POT) filed a lawsuit in the United States District Court for the Northern District of Illinois against the board of directors for allegedly violating Federal Securities Laws in connection with the takeover bid by BHP Billiton.
The plaintiffs allege that the Potash Corp's board abused its position by refusing to consider BHP's $130-a-share offer and by adopting a poison pill without seeking shareholder approval. In early August 2010, BHP Billiton attempted to engage the Potash Corp. Board in discussions concerning a potential acquisition of Potash Corporation by BHP Billiton Development 2 (Canada) Limited, a wholly-owned indirect subsidiary of BHP Billiton Plc. Then on or about August 13, 2010, BHP Billiton sent the Potash Board a written proposal to purchase Potash Corp. for US$130 per POT share in cash, a transaction valued at approximately US$38.6 billion. Shares of Potash Corp./Saskatchewan (USA) (NYSE:POT), which traded in 2008 as high as $230 and as low as $53.39 per share and regained value over the past 1.5 years and jumped in response to the takeover proposal from roughly $100 per share during the end of July to over $150 after Potash Corp announced on August 16, 2010 announced that it adopted a shareholder rights plan in respect to a take-over bid, such as the one from BHP Billiton.

But according to the complaint the plaintiff alleges that Potash Board of Directors in doing so violated Sections 14(d)(4) and 14(e) of the Securities Exchange Act of 1934 and the Canada Business Corporations Act in connection with the tender offer by BHP Billiton Development 2 (Canada) Limited, a wholly-owned indirect subsidiary of BHP Billiton Plc (collectively, BHP ), for Potash (the Tender Offer ). The plaintiffs claim that the Potash Board refused to consider BHP Billiton's non-coercive, premium offer in good faith, and adopted the shareholders rights plan, also known as a poison pill (the Poison Pill ) to entrench incumbent directors and management of Potash Corp. and to prevent BHP Billiton from acquiring Potash Corp without the consent of the Board.

The plaintiffs fear that the Poison Pill, if implemented, would significantly dilute Potash's equity, drive down the price of its shares, and the ability of Potash shareholders to freely consider BHP Billiton's offer and any other takeover bid has been reduced by the threat of implementing the Poison Pill.

On August 20, 2010, BHP Billiton commenced the Tender Offer to purchase all of the outstanding common shares of Potash for US$130 per share. The Tender Offer is conditioned on the inapplicability and redemption of the Poison Pill.

According to the complaint, in an attempt to defeat shareholder support for the Tender Offer, the defendants, on August 23, 2010, then issued a materially false and misleading Solicitation/Recommendation Statement on Schedule 14D-9, which among other things recommends that Potash shareholders reject the Tender Offer and not tender their shares.

Shares of Potash Corp./Saskatchewan (USA) (Public, NYSE:POT) decreased since then and traded recently at $140.93 per share.