Here's Why Potash Rejected A $34 Billion Takeover Bid From BHP


The news of the morning is that fertiliser maker Potash (POT) revealed that it had come under an unsolicited takeover attempt from miner BHP Billiton.

The company has published a full presentation explaining the rejection.

Some of the key points are as follow:

  • Food growth is going to be huge, thanks to global demand factors, and current tight capacity.
  • It’s going to be a while before slack is created in the food system, as evidenced by above-historical commodity prices, suggesting ongoing demand for Potash’s fertiliser products.
  • Potash is unique in size, scope, and scale, and thus the company has scarcity value. In otherwords, BHP Billiton couldn’t achieve its goals by buying a company like Mosaic (MOS) or Intrepid Potash.

The other key point that goes unspoken: Raise your offer!

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