Tuesday, August 17, 2010

POT Stock Jumps: Silly $39B Takeover By BHP Soundly Rejected

POT's board of directors has rejected an unsolicited takeover proposal from BHP for $39B, or $130 a share in cash.
POT is trading higher by 29% in pre-market today.

POT's Chairman Dallas Howe said that “The Potash Corp. Board of Directors unanimously believes that the BHP Billiton proposal substantially undervalues Potash Corp. and fails to reflect both the value of our premier position in a strategically vital industry and our unparalleled future growth prospects,”

Given that POT trades at CAD$112.50, the offer is indeed ridiculous. Obviously it is a n initial low ball number to start the conversation.

With the expected increase in population as well as the quality of food that the new middle classes of China and India and elsewhere will eat, the fertilizer markets are going ot be a very hot area, hence the high level of activity.
Global population will grow by one third to 9.1 billion in 2050 from 6.8 billion, according to the United Nations.

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