How High Will the Potash Corp. Price Go
Reuters is reporting that Potash Corp. has formally put pressure on BHP to raise the price for its takeover of Potash Corp. or have the company get sold to some other company. BHP originally bid $130 per share for the company or $39 billion in total. The price has already jumped to over $150 per share and there are rumors that if BHP raises their bid to $162, the company would be theirs. However, BHP may not want to go that high.
It is interesting that the CEO of the company, Bill Doyle will earn over $500 million if the deal goes through. One party that may come to the rescue of Potash is the Chinese company Sinochem, China’s top fertilizer firm and No. 4 oil company. Sinochem’s Chinese connection is significant due to an expected surge in fertilizer usage by China, India and other emerging economies. China has bought resource companies located in Canada before (Potash headquarters is in Saskatoon).
Another bidder may be the Brazil mining company Vale, however, it appears they have backed out of the process.
Another option is to break up the company or sell out to a consortium of companies that would jointly bid for the company and then divide it.
Based on where the market price is and the ability of BHP to make the deal, I have a feeling that this will happen and soon.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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