(Updates with share price gain in sixth paragraph.)
Jan. 22 (Bloomberg) -- Verde Potash Plc, the second-worst performer among global peers in the past year, is considering proposals to defend itself against hostile takeover bids, said the company’s chief executive officer. Shares rose today.
The company, which is developing fertilizer projects in Brazil, is analyzing two bank proposals to create an anti- takeover strategy as the share price slump increases the chance of an unsolicited offer, CEO Cristiano Veloso said today. The Toronto-listed company hasn’t received any offers and seeks to remain independent, he said, declining to name the banks that proposed the measures.
“As the share price is very low, you end up having the risk of a hostile offer,” Veloso, 32, said in an interview from the CRU Fertilizer Latino Americano 2013 conference in Sao Paulo. “This is mainly a risk because our objective is to build the project, grow and transform the company into one of the biggest fertilizers companies in Brazil.”
Verde Potash, whose shareholders include PineBridge Investments LLC, is developing a potash project in Brazil’s Minas Gerais state, which is targeted to produce as much as 5 million metric tons a year by 2019, Veloso said. The company expects to start Cerrado Verde output in the second half of 2015, provided there aren’t any delays in obtaining licensing permits, he said.
Verde Potash shares have lost investors 47 percent in the past year, the worst performance among 15 of its global peers tracked by Bloomberg after Avalon Rare Metals Inc. The group’s average loss in the period was 14 percent. Verde Potash trades at 3.76 times the company’s book value compared with an average ratio of 12.46 among similar companies.
The stock gained 1.6 percent to C$3.84 in Toronto today after three days of losses.
“From the moment a hostile offer starts, the period you have to react is very short,” Veloso said. “If you don’t have a strategy in place, if you don’t have some things done, it gets more difficult.”
--Editors: Robin Saponar, James Attwood