After the board of Potash (NYSE:POT) officially rejected the bid from BHP Billiton (NYSE:BHP), CEO Bill Doyle said in an interview the company is worth billions more than the offer from BHP.
Boyle noted, “Two years ago we hit $240 and in the meantime we have been adding capacity through our capital program of expansions.”
The highs for Potash would be valued at close to $71 billion if that's what the would bring.
Although current market conditions couldn't justify those numbers, taking into account the surety of increased demand for potash and other fertilizers in the years ahead does give Potash some support and justification for pushing up the price, and they very well could get billions more, especially if it ends up being a bidding war.
This could happen because of the sector they're in, as several emerging markets, especially China, don't have the fertilizers needed domestically to handle their growing demand, and so are looking for partnerships or deals to address that large need.
Rumors have several companies from China being interested in Potash, but price is a factor, along with leverage, which could punish a company for a long period of time if both are exorbitant.
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