BHP Files Motion to Dismiss Potash Suit
In response to BHP Billiton’s unrelenting takeover bid, Potash Corporation of Saskatchewan Inc. filed a complaint for injunctive and other relief last week in the US District Court for the Northern District of Illinois.
Under UK securities law, offers that exceed 25% of a company’s market cap must be approved by shareholder majority. In order circumvent these requirements, Potash claims that BHP attempted to distort the price “before PCS recovered from a 52-week low” by announcing plans to become a major competitor. At the time the offered was announced, the deal amounted only to about 23% of BHP’s market cap. During the legal proceedings, BHP filed a motion to dismiss the case to which US District Judge David Coar stated that the evidence presented will stand until he decided whether to dismiss the case. It is clear that Potash Corporation is attempting to buy time for the November 18th deadline. They have even received notification from Canadian regulators that regulators needed more time to review the deal. As the November deadline approaches, Potash is seeking innovative ways to prevent BHP from completing a hostile takeover under the name of “protecting shareholder value.”
– Michael Alfaro
Health Plan to be dropped by McDonald’s
McDonald’s has issued a warning to the federal regulators that it may drop the existing health insurance plans for its restaurant workers unless the new requirement set forth by the U.S. regulators is waived off. Nearly 30,000 McDonald’s employees at 10,500 of its locations throughout the U.S. are currently participating in this plan, which provides a maximum of $2,000 to $10,000 a year in basic medical coverage at a cost of $14 to $32 a week.
It seems as if the insurer would discontinue the mini-med plan unless they get an exemption from the requirement to spend 80-85% of premiums on benefits. They also say that dozens of other employers could find themselves in the same situation as McDonald’s. However, the government is waiting for the association of state insurance commissioners to draft recommendations on this matter.
– Rowena Zacharia
Article submitted by: Michael Alfaro and Rowena Zacharia of the Capital Markets Lab. To learn more about the Capital Markets Lab please visit their web site https://business.fiu.edu/capital-markets-lab/.