Ever since the $130-a-share offer for Potash Corp. of Saskatchewan Inc. (NYSE:POT) by BHP Billiton (NYSE:BHP), rumors have skyrocketed concerning an inevitable bidding war that is about to emerge.
Major mining company competitors of BHP like Rio Tinto (NYSE:RTP) and Vale (NYSE:VALE) have been mentioned as possible suitors, although the likelihood of a state-owned business would probably be the biggest competitor to BHP.
China is one of the more obvious choices there, as they consume about 30 percent of the fertilizer in the world, and owning Potash would be a huge win for them.
Russia has also been mentioned as a possible suitor, although they would probably have trouble competing against China, or some of the giant mining companies.
One dark-horse in the possible bidding war could be India, who has a strong need for fertilizer as well, and may have the resources to compete with a Chinese bid.
If this bidding war does ensue, it will be bad news for investors who want to invest in Potash, as it is probably already overvalued from the BHP bid.
But for Potash shareholders, it's a golden opportunity to really make some big profits if the bidding war becomes a reality.
Investors will also have to be careful of the other fertilizer companies, which have moved up in price as an overall sector, and are without a doubt overvalued. The assumption is if Potash of Saskatchewan is a target, eventually the others will be too once a winner emerges and takes ownership of Potash.
Stocks like Agrium (NYSE: AGU), Intrepid Potash (NYSE:IPI) and CF Industries (NYSE:CF) did shoot up on the offer for Potash, but they're starting to come back to earth again, although they're sure to shoot up again if other bids for Potash come about.
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