Fertilizer Smells Sweet Today

by Marilou Long on August 17, 2010

in M & A Activity

Potash Corp, ticker POT, rejected an unsolicited bid today from BHP Billiton.  BHP bid $130 a share, and POT is currently trading around $140, up 25%.  From the FT article:

“The BHP Billiton proposal substantially undervalues PotashCorp and fails to reflect both the value of our premier position in a strategically vital industry and our unparalleled future growth prospects,” Dallas Howe, PotashCorp chairman, said in a statement.

“The fertiliser industry is emerging from the recent global economic downturn, and we feel strongly that PotashCorp shareholders should benefit from the current and potential value of the company. We believe the BHP Billiton proposal is an opportunistic effort to transfer that value to its own shareholders.”

The company has a slideshow up on their website describing why the Board rejected the offer.  While the global economic recovery remains anemic, many corporations have greatly improved their balance sheets during this extended period of low interest rates.  We will probably continue to see M&A activity as corporations try to improve their growth rates by making strategic acquisitions.  Dell made an acquisition yesterday in an effort catch up to HPQ and IBM on the services side.

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