Following up on "Potash: BHP could pay USD 125-130 for Potash Corp., bid would be 13% EPS accretive - Merrill Lynch (POT)".
The stock is up a bit more, at $102.96. From the Financial Post's Trading Desk:
The once red-hot fertilizer group has failed to capitalize on the market rally that has sent North American indexes to their highest levels in more than a year, and that has some suggesting shares in companies like Potash Corp. are depressed.
Rumours have been swirling for some time that the likes of BHP Billiton Ltd., the world’s biggest mining company, would want to take out Potash Corp., the world’s biggest potash producer. But let’s not forget China, the world’s largest buyer of the fertilizer and a nation that faces a tight supply situation. The world holds off on placing potash orders every time China is in negotiations, but China itself would save itself a lot of time and effort by having a secure source of supply. It would also be seated on the other side of the table.
China’s Zhongchuan International Mining Corp. reportedly just signed a deal to explore and build a large potash base in Saskatchewan. Annual production capacity is expected to be 3 million tonnes.
But what’s got the ag market going this week is a report from Bank of America Merrill Lynch that suggests BHP could be willing to pay a 30% premium to Potash’s share price. The firm suggested that the negative sentiment surrounding potash provides BHP with an opportunity to acquire agricultural assets at a cycle low, after failing to so during the lowest points of the market....MORE