Well, it finally happened. After well over a year of rumor and innuendo, BHP Billiton
We've witnessed BHP's hunger for potash grow over the past several years. In 2008, the company bought out its partner in the massive Jansen project, which may be the world's biggest potash mine when it comes online. BHP also snapped up junior explorer Athabasca Potash earlier this year, expanding its foothold in the mineral-rich Canadian province of Saskatchewan. All of that proved a prelude to today's takeover attempt, at a purchase price approaching ExxonMobil's
PotashCorp's board of directors is having none of it. Not only did these folks disclose their rejection of the proposal with the usual language about substantial undervaluation and opportunism on the part of the acquirer (shades of CF Industries'
PotashCorp shareholders are not crazy to bid up the shares above the level offered by BHP. As we saw with the long, drawn-out Terra takeover, these bouts can go many rounds. BHP must be prepared to pay well over $130 per share. The company could theoretically build another PotashCorp organically, but it would take decades. A takeover would give the megaminer an instant commanding position in the industry -- estimated at about 30% by one analyst quoted in The Wall Street Journal today.
One thing I do object to is the pop in shares of a company like Intrepid Potash