Teachers, Singapore Bidding on Potash

Leo Kolivakis's picture Submitted by Leo Kolivakis on 10/10/2010 14:57 -0500

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Kate Holton of the Globe & Mail reports, Teachers, Singapore sovereign fund talk Potash:

Canada’s Ontario Teachers’ Pension Plan is plotting a bid to spoil BHP Billiton’s $39-billion (U.S.) hostile offer for Potash Corp , British newspaper The Sunday Times said.


The newspaper said the pension fund was talking to Temasek, Singapore’s sovereign wealth fund, about launching a rival offer. The report said the two also had an industrial partner, thought to be Teck Resources , a Canadian mining group.


The discussions are at an early stage but the two funds are considering an outright takeover or buying a minority stake at a higher price than that offered by BHP.


Potash Corp, the worlds top fertilizer maker, has flatly rejected BHP’s $130-a-share bid. Sinochem , the state-owned Chinese chemical group, is also viewed as likely to lead a competing group.


British papers The Times and The Sunday Telegraph also said Potash was considering defensive moves, which could include a break-up of the business to fend off BHP.


Both newspapers said one move Potash could make is to sell its nitrogen and phosphorus operations and return up to $70 a share to its shareholders.


The Telegraph said Potash was talking to groups such as OTPP and others, which had received strong support from the Canadian government.


No one from the London offices of the Ontario Teachers’ Pension Plan was immediately available to comment. A spokeswoman for Potash declined to comment on the reports.

In an interview to the Globe & Mail, Potash’s CEO, Bill Doyle, said BHP’s $130 per-share offer, which values the company at $38.6-billion, is “a non-starter” and he bluntly predicted that Potash Corp.’s stock would “blow the doors off” its record high of about $240 if the company were to stay independent:


“When you think about this company being sold for $130, $150, $160 or $170 – when you look at the future growth of this company and where we are going with the share price … This deal has a long way to go,” Mr. Doyle said.


“$170, that’s crazy.”


However, the decision will be made by Potash Corp. shareholders, he added.


Potash Corp. has argued BHP’s bid is opportunistic, made just as it believes potash prices are poised for a recovery as fertilizer demand increases amid concerns of a global food shortage.


The company’s stock reached an all-time peak of $239.50 on the New York Stock Exchange on June 17, 2008, before a wrenching dive as the commodity boom ended with a thud. The stock dropped as low as $49.60 just six months later during the financial crisis.


Before the BHP bid, the shares had regained enough ground to top $100 apiece.


Mr. Doyle argued that the market for fertilizer producers has improved enough since the bid in August that BHP’s offer is now below where Potash stock would have been trading without it. He pointed to rival fertilizer maker Mosaic Co., (MOS) which has risen almost 20 per cent since the BHP bid on optimism about demand. (There’s little or no takeover premium built into Mosaic, since it is controlled by Cargill Inc.)


Mr. Doyle said the company is still in discussions with other potential bidders, and that he believes another offer will come.


“At the end of the day you are going to have a choice between a transaction, or the company being a standalone entity. I can tell you, I can make a very, very strong case that the best choice that could be made will be that the company is a standalone entity because we are going to blow the doors off the $240 share price.


“We just are, because we are positioned for growth like no other company in the world.”

Mr. Doyle can say that again. Potash Corp is one of the hottest growth stories in the world, and bankers have been working feverishly on a potential break-up plan to fend off the $38.6bn bid from BHP Billiton. Looks like they’ve succeeded, but stay tuned, something tells me this story is far from over.

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by qussl3
on Sun, 10/10/2010 – 15:36

Temasek hasnt exactly been know to make good investments, all the better for Potash I suppose.

Login or register to post comments by Astute Investor
on Sun, 10/10/2010 – 16:02

“When you think about this company being sold for $130, $150, $160 or $170 – when you look at the future growth of this company and where we are going with the share price … This deal has a long way to go,” Mr. Doyle said.

 “$170, that’s crazy.”


Newsflash, Mr. Doyle…..

What is a company “worth”?  What anyone is willing to pay for it – nothing more, nothing less.  And right now that is $130 a share.


Login or register to post comments by Sudden Debt
on Sun, 10/10/2010 – 16:03

just watch Apple and google 🙂

2 airfactory’s worth as much as a small country!

Bubble? NOOOO!!!

Login or register to post comments by SteveNYC
on Sun, 10/10/2010 – 16:11

“We just are, because we are positioned for growth like no other company in the world.”


Pretty bold statement…..this guy is some promoter! You’d think that the market would pick up on this, no?

Login or register to post comments by Leo Kolivakis
on Sun, 10/10/2010 – 16:22

Market bidding up fertilizer shares like they’re heading to the moon:

Login or register to post comments by tom a taxpayer
on Sun, 10/10/2010 – 16:18

Leo – Thanks for the update on this vital natural resource. The world-wide sovereign and commercial interests in acquiring future supplies indicate:

potash = agricultural gold.

Login or register to post comments by b_thunder
on Sun, 10/10/2010 – 17:31

is anyone even asking the follwoing questions: 

1. What is the threshold when adding fertilizer does not result in higher crop yield?

2. What is the threshold when adding fertilizer cost more that what the additional crops can be sold for?

3. How soon will these threshold be reached?


Login or register to post comments by anonnn
on Sun, 10/10/2010 – 17:56

re Potassium, Phosphate, organic Nitrogen, etc.—consult any reference for Leibig’s Minimum. Established science can be terrifying. 

After that, with patience, there is lotsa quality data at theoildrum.com website. Sorry forget name of main blogger on this subject.

Login or register to post comments by Spitzer
on Sun, 10/10/2010 – 21:25

Good point.

My Dad farmed for 30 years with no store bought fert, that also gave him the oppertunity to go organic and really make the big bucks.

These fert stocks remind me of base metal stocks.

Login or register to post comments by pitz
on Sun, 10/10/2010 – 23:05

How can some abortion of a company dreamt up in a Stanford dorm room be worth 5X as much as POT, a firm that has real assets that can’t be conjured out of thin air?

$130 is completely and utterly innappropriate.

Login or register to post comments by mcarthur
on Sun, 10/10/2010 – 23:59

I currently work for Potash Corp. Glad to see plenty of folks think we are worth a bundle.  I suspect potash prices are heading north shortly since we can’t come close to meeting demand these days. We are generally OK with this BHP thing but I’ll retire if the Asians get involved, along with plenty of others. 


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