BHP Billiton, the biggest and most cash-rich mining company, returned to frontline dealmaking yesterday with a $39bn preliminary offer for PotashCorp, a fertiliser producer whose board rejected the offer.

Canada-based PotashCorp, the world’s largest fertiliser producer, described BHP’s $130 a share cash offer as “grossly inadequate”, setting the stage for a takeover battle. The offer was a 20 per cent premium to PotashCorp’s New York-traded shares on August 11, the day before Marius Kloppers, BHP chief executive, met PotashCorp executives to pitch a takeover.

BHP, which has spent two years quashing rumours that it would bid for the Canadian company, said in a letter to PotashCorp that it had “fully negotiated a financing facilities agreement” with its banks. At the end of last year, BHP held $8.4bn in cash.