Potash (POT) reported a disastrous second quarter, as the fertilizer company's profits plunged 38 percent. To add fuel to the fire, the company also projected earnings for the second half would fall below previous expectations.
Earnings for 2012 were downwardly revised from $3.20 to $3.60 to $2.80 to $3.20 a share. Analysts were looking for earnings estimates of $3.47 a share on the year.
For the next quarter Potash projected earnings to come in at a range of 70 cents a share to 90 cents a share. The Street was looking for 95 cents a share.
Even so, Potash noted that the drought, which has resulted in higher crop prices, should result in farmers increasing their use of fertilizer for 2013.
Income in the 2nd quarter dropped 60 cents a share to finish at $522 million, way down from the 96 cents a share or $840 million generated last year.
Part of the poor results were attributed to a $341 million impairment charge from an investment by Potash in Chinese fertilizer maker Sinofert Holdings Ltd.
The phosphate segment also dragged on the company, as margins were lower than expected because of weaker demand and prices.
On the other hand, the nitrogen business of the company was helped by low natural gas prices.
Potash raised its forecast for combined phosphate and nitrogen gross margin in 2012 to a range of $1.4 billion to $1.6 billion, an increase over the $1.3 billion to $1.5 billion originally projected.
Because of the announcement that the ECB would do everything to prop up the euro, shares of Potash closed up at $44.99, gaining $0.50, or 1.12 percent. In after hours trading over half of that was already given back.
Showing posts with label Potash of Saskatchewan. Show all posts
Showing posts with label Potash of Saskatchewan. Show all posts
Thursday, July 26, 2012
Wednesday, November 3, 2010
Agrium (NYSE:AGU) Downgraded on Valuation after 3-Month Rise in Share Price
After rising over 33 percent over the last three months, Agrium's (NYSE:AGU) valuation seems to be strongly reflecting the value of the company, and Chardan downgrading them to "Neutral," citing valuation as their reasoning behind the move.
The actual ongoing run-up in share price started in July, when the company was valued at just under $50 a share, and stand today at over $87 a share.
Some of this was from increasing corn and soybean prices, but also the bid by BHP Billiton (NYSE:BHP) for Potash Corp. (NYSE:POT), which tended to offer support for the overall industry, and increase other potential takeover rumors as well.
Agrium closed Tuesday at $87.22, dropping $1.16, or 1.31 percent.
The actual ongoing run-up in share price started in July, when the company was valued at just under $50 a share, and stand today at over $87 a share.
Some of this was from increasing corn and soybean prices, but also the bid by BHP Billiton (NYSE:BHP) for Potash Corp. (NYSE:POT), which tended to offer support for the overall industry, and increase other potential takeover rumors as well.
Agrium closed Tuesday at $87.22, dropping $1.16, or 1.31 percent.
Friday, October 29, 2010
BHP (NYSE:BHP) Gets Interim Sealing of Potash (NYSE:POT) Complaint in Lawsuit
Chicago U.S. District Judge Charles Norgle allowed a request by (NYSE:BHP) to be awarded where parts of a complaint filed by Potash Corp. Inc. (NYSE:POT) will be sealed on an interim basis.
The judge gave BHP until the close of business on November 1 to explain why the seven paragraphs being sealed should remain so. Potash was given a three-day period to respond.
BHP has claimed the paragraphs represent “highly confidential and sensitive business information.”
A prior request to seal portions of the complaint was denied by U.S. District Judge David H. Coar. It was later on that same day BHP filed an emergency motion to have parts of the complaint sealed.
The lawsuit filed by Potash against BHP claims the giant mining company made public statements which led to the value of the shares of the fertilizer company to lose value because they were misleading to the public.
The judge gave BHP until the close of business on November 1 to explain why the seven paragraphs being sealed should remain so. Potash was given a three-day period to respond.
BHP has claimed the paragraphs represent “highly confidential and sensitive business information.”
A prior request to seal portions of the complaint was denied by U.S. District Judge David H. Coar. It was later on that same day BHP filed an emergency motion to have parts of the complaint sealed.
The lawsuit filed by Potash against BHP claims the giant mining company made public statements which led to the value of the shares of the fertilizer company to lose value because they were misleading to the public.
BHP's (NYSE:BHP) Opposition from Saskatchewan Over Potash (NYSE:POT) Bid Getting Weirder
The obsession with some politicians from Saskatchewan in their opposition to the bid by BHP Billiton for the giant fertilizer company Potash Corp. (NYSE:POT) is getting stranger and stranger, contradictory, and hypocritical.
As Opposition New Democratic leader Dwain Lingenfelter has asked of Premier Brad Wall, how can reports the First Nations are working with Chinese investors and pension funds to put together a bid coincide with Wall's making a "Captain Canada" speech last week?
In other words, as we've mentioned in the past, there seems to be something odd happening behind the scenes in the midst of these contradictory actions.
Wall has been pressuring Saskatchewan politicians to get fully behind his opposition to the deal in order to present a unified front. But that's the point Lingenfelter, that how can there be a unified front when there are other deals being put together which are essentially doing the same thing BHP is: being a foreign company bidding for the Canadian-based potash producer.
Wall continues his mantra of the deal not being a net benefit to Saskatchewan, even though independent studies have shown that not to be the case as all.
In the short term there may be some truth to it, but over a period of time, which is what really counts, it would probably end up being more beneficial to the province and Canada as a whole.
So that still begs the question of why Wall and some are so obsessed with their opposition to the BHP bid. Are they saying they'd rather have the Chinese own Potash than BHP? Why?
As Opposition New Democratic leader Dwain Lingenfelter has asked of Premier Brad Wall, how can reports the First Nations are working with Chinese investors and pension funds to put together a bid coincide with Wall's making a "Captain Canada" speech last week?
In other words, as we've mentioned in the past, there seems to be something odd happening behind the scenes in the midst of these contradictory actions.
Wall has been pressuring Saskatchewan politicians to get fully behind his opposition to the deal in order to present a unified front. But that's the point Lingenfelter, that how can there be a unified front when there are other deals being put together which are essentially doing the same thing BHP is: being a foreign company bidding for the Canadian-based potash producer.
Wall continues his mantra of the deal not being a net benefit to Saskatchewan, even though independent studies have shown that not to be the case as all.
In the short term there may be some truth to it, but over a period of time, which is what really counts, it would probably end up being more beneficial to the province and Canada as a whole.
So that still begs the question of why Wall and some are so obsessed with their opposition to the BHP bid. Are they saying they'd rather have the Chinese own Potash than BHP? Why?
BHP's (NYSE:BHP) Bid for Potash (NYSE:POT) to be Ruled on Soon by Canada
BHP Billiton (NYSE:BHP) and Potash Corp (NYSE:POT) will find out very soon whether or not the bid from BHP to take over the giant fertilizer company will be allowed to go forward by the Canadian government.
Prime Minister Stephen Harper reiterated Thursday it ruling will happen very soon. That points to the confirmation they won't attempt to extend the process by another 30 days. The ruling will thus be made on November 3.
Pressure to make the decision based on politics was set aside by Harper, who asserted it will be based on a fair evaluation of the overall deal.
The province of Saskatchewan has opposed the deal from the beginning, but some opposition to that has risen, with some starting to ask questions on why the BHP bid wouldn't be good for the country when one including the Chinese would be.
Prime Minister Stephen Harper reiterated Thursday it ruling will happen very soon. That points to the confirmation they won't attempt to extend the process by another 30 days. The ruling will thus be made on November 3.
Pressure to make the decision based on politics was set aside by Harper, who asserted it will be based on a fair evaluation of the overall deal.
The province of Saskatchewan has opposed the deal from the beginning, but some opposition to that has risen, with some starting to ask questions on why the BHP bid wouldn't be good for the country when one including the Chinese would be.
Wednesday, October 27, 2010
Monsanto (NYSE:MON) Shares Boosted on Takeover Rumors
The on-again, off-again rumors and speculation surrounding the possible takeover of agriculture giant Monsanto (NYSE:MON) are making their rounds again today, and the share price of the company shot up in response, although they've pulled back a little as the trading day has went on.
Maybe the highly reported bid by BHP (NYSE:BHP) for Potash (NYSE:POT) has stirred up the rumor pot again concerning Monsanto.
Of course plunging from their annual peak of a little over $87 a share has something to do with it as well, as they're probably considered a bargain at this time, as the probability of corn prices remaining higher is real, and that could cause the share price of Monsanto to rebound.
If a company was interested, they wouldn't want to wait for that to happen where they would then have to pay a strong premium for the company.
Monsanto will always be controversial because of its products, but they're especially weak and beaten down now, probably the reason of a potential takeover rears its head on a consistent basis.
Maybe the highly reported bid by BHP (NYSE:BHP) for Potash (NYSE:POT) has stirred up the rumor pot again concerning Monsanto.
Of course plunging from their annual peak of a little over $87 a share has something to do with it as well, as they're probably considered a bargain at this time, as the probability of corn prices remaining higher is real, and that could cause the share price of Monsanto to rebound.
If a company was interested, they wouldn't want to wait for that to happen where they would then have to pay a strong premium for the company.
Monsanto will always be controversial because of its products, but they're especially weak and beaten down now, probably the reason of a potential takeover rears its head on a consistent basis.
Monday, October 25, 2010
BHP (NYSE:BHP) Bid for Potash (NYSE:POT) Close to Being Decided
Excluding market factors, the bid by BHP Billiton (NYSE:BHP) bid for Potash Corp. (NYSE:POT) is coming to a head, as the Canadian government is pouring over the details to decide whether to allow the deal to go ahead.
The province of Saskatchewan, which has been in emotional hysterics since the bid by BHP, has continued on with their strange behavior in their opposition to the bid, pressuring the Canadian government to stop the deal from going forward.
The government responded by saying they'll perform their "own analysis" on the bid, which they have until November 3 to make a decision on.
Saskatchewan has shamelessly asserted the deal will cost the province billions if BHP wins the bid, even though outside studies have shown that not to be the case as time goes on, although it could, in the short term, result in lower tax revenue for the region.
"Obviously there is a process involved and the test that we employ under the Investment Canada Act is the net benefit to Canada test," said industry minister Clement.
It would be surprising to see a decision made against BHP, but stranger things have happened.
Other than Saskatchewan, there doesn't seem to be widespread opposition to the takeover, other than from other Canpotex participants Mosaic (NYSE:MOS) and Agrium (NYSE:AGU), who don't what to see their monopoly broken up if BHP wins the bid and decides to produce the fertilizer at the rate the choose and not controlled production to maintain prices, and thus, margins.
The province of Saskatchewan, which has been in emotional hysterics since the bid by BHP, has continued on with their strange behavior in their opposition to the bid, pressuring the Canadian government to stop the deal from going forward.
The government responded by saying they'll perform their "own analysis" on the bid, which they have until November 3 to make a decision on.
Saskatchewan has shamelessly asserted the deal will cost the province billions if BHP wins the bid, even though outside studies have shown that not to be the case as time goes on, although it could, in the short term, result in lower tax revenue for the region.
"Obviously there is a process involved and the test that we employ under the Investment Canada Act is the net benefit to Canada test," said industry minister Clement.
It would be surprising to see a decision made against BHP, but stranger things have happened.
Other than Saskatchewan, there doesn't seem to be widespread opposition to the takeover, other than from other Canpotex participants Mosaic (NYSE:MOS) and Agrium (NYSE:AGU), who don't what to see their monopoly broken up if BHP wins the bid and decides to produce the fertilizer at the rate the choose and not controlled production to maintain prices, and thus, margins.
Tuesday, October 19, 2010
BHP (NYSE:BHP) Asks Court to Reject Potash (NYSE:POT) Request for Confidential Documents
The nationalist-fueled obsession of Potash Corp. (NYSE:POT) in its attempt to fight off the bid by BHP Billiton Ltd. (NYSE:BHP) gets weirder and weirder, as their latest action has been to ask a court in Chicago to force BHP to hand over private documents on their strategy on how they're going to gain regulatory approval to take over the company.
With little to stand in their way, other than the above-mentioned and increasingly nationalistic reason, BHP doesn't have to do too much other than continue to tell their story and refute objections based mostly on emoting rather than actual facts.
Although the continuing fantasy that there are a number of alternate suitors for Potash secretly waiting in the wings, as things unfold, they are largely seen to be built on shifting sand rather than solid or actual options. In some cases it's doubtful if they were even true in the first place.
As far as the documents being sought, Potash is asking the court to allow them to see what BHP and government officials communicated about in relationship to the offer.
It's arrogant and presumptive to even ask for that in a way that appears to be using the court to do the work they aren't able to do.
Although it would be outrageous for the court to rule in the favor of Potash, you never know what could happen in these types of cases.
BHP said concerning the request, “If a target company could obtain regulatory submissions made by a bidder in connection with a pending tender offer, the bidder’s motivation to fully co-operate with the government would be fundamentally chilled. PCS should not be permitted to do an end-run around the important policies and laws of its home jurisdiction, and this court should afford comity to those policies and laws.”
BHP is right.
With little to stand in their way, other than the above-mentioned and increasingly nationalistic reason, BHP doesn't have to do too much other than continue to tell their story and refute objections based mostly on emoting rather than actual facts.
Although the continuing fantasy that there are a number of alternate suitors for Potash secretly waiting in the wings, as things unfold, they are largely seen to be built on shifting sand rather than solid or actual options. In some cases it's doubtful if they were even true in the first place.
As far as the documents being sought, Potash is asking the court to allow them to see what BHP and government officials communicated about in relationship to the offer.
It's arrogant and presumptive to even ask for that in a way that appears to be using the court to do the work they aren't able to do.
Although it would be outrageous for the court to rule in the favor of Potash, you never know what could happen in these types of cases.
BHP said concerning the request, “If a target company could obtain regulatory submissions made by a bidder in connection with a pending tender offer, the bidder’s motivation to fully co-operate with the government would be fundamentally chilled. PCS should not be permitted to do an end-run around the important policies and laws of its home jurisdiction, and this court should afford comity to those policies and laws.”
BHP is right.
Will Potash (NYSE:POT) be Saved by Canadian Pension Funds from BHP (NYSE:BHP) Bid?
It's not a surprise that Canadian pension funds have been linked to a possible bid for Potash Corp (NYSE:POT) in order to keep BHP Billiton(NYSE:BHP) from taking over the fertilizer giant, as the rumor has been circulating for at least a couple of weeks.
What is interesting, is the admission, according to unnamed sources cited by the Globe and Mail, that it is all based on nationalism rather than the terms of the deal.
This is why some of the reasoning behind the opposition of Potash toward the bid never really made any sense. This is just the first time that I've seen that an admission was made that it wasn't based on the terms of the deal or potential loss of tax revenue, but on losing control to a company outside of Canada.
One of the most surprising things that could happen with all of this if the alleged plan to acquire about 30 percent of Potash by the pension funds would actually materialize. If it did, it would effectively block being taken over by BHP.
The sources said Saskatchewan government didn't want to see Potash taken over by a foreign company, and the work of nationalists behind the scenes who feel even stronger.
One odd part of the story is the inclusion of China investment as part of successfully making the bid. Although China would only hold part of the company via the partnership, it would still be a significant portion.
What is different is it wouldn't be a controlling portion like BHP will have if they succeed.
The source of the story said the possibility of this becoming a reality is very low.
What is interesting, is the admission, according to unnamed sources cited by the Globe and Mail, that it is all based on nationalism rather than the terms of the deal.
This is why some of the reasoning behind the opposition of Potash toward the bid never really made any sense. This is just the first time that I've seen that an admission was made that it wasn't based on the terms of the deal or potential loss of tax revenue, but on losing control to a company outside of Canada.
One of the most surprising things that could happen with all of this if the alleged plan to acquire about 30 percent of Potash by the pension funds would actually materialize. If it did, it would effectively block being taken over by BHP.
The sources said Saskatchewan government didn't want to see Potash taken over by a foreign company, and the work of nationalists behind the scenes who feel even stronger.
One odd part of the story is the inclusion of China investment as part of successfully making the bid. Although China would only hold part of the company via the partnership, it would still be a significant portion.
What is different is it wouldn't be a controlling portion like BHP will have if they succeed.
The source of the story said the possibility of this becoming a reality is very low.
Monday, October 18, 2010
When will Potash, (NYSE:POT), CF Industries (NYSE:CF), Mosaic (NYSE:MOS), Agrium (NYSE:AGU) and Intrepid Potash (NYSE:IPI) Cool Off?
The agriculture sector was hit with two major catalyst in the a similar period of time, giving companies like Potash Corp. of Saskatchewan (NYSE:POT), CF Industries (NYSE:CF), Mosaic (NYSE:MOS), Agrium (NYSE:AGU) and Intrepid Potash (NYSE:IPI) a big boost in share price.
It began when BHP (NYSE:BHP) made their $130 a share bid for Potash Corp. Then the confirmation came that corn and soybean yields would be far below prior estimates.
With the industry propped up from BHP's bid and assumptions some consolidation may start to happen, along with corn and soybean prices soaring, share prices of these companies and others connected to agriculture rose significantly.
Prices for all the companies mentioned above have soared since August.
Depending on if investors believe commodity prices are driving the move or the bid by BHP is the key factor, will determine how they are played. More than likely it's a combination of both. And depending on whether or not BHP is given the okay to take over Potash will decide how much of a factor that played in the sector.
At minimum if they are rejected, will see some pull back in the stocks. If they go forward, they could continue their upward climb for some time.
Another element is how much this will affect the price offered by BHP. They may have to push it up to somewhere in-between the existing share price of Potash and the $130 bid.
It began when BHP (NYSE:BHP) made their $130 a share bid for Potash Corp. Then the confirmation came that corn and soybean yields would be far below prior estimates.
With the industry propped up from BHP's bid and assumptions some consolidation may start to happen, along with corn and soybean prices soaring, share prices of these companies and others connected to agriculture rose significantly.
Prices for all the companies mentioned above have soared since August.
Depending on if investors believe commodity prices are driving the move or the bid by BHP is the key factor, will determine how they are played. More than likely it's a combination of both. And depending on whether or not BHP is given the okay to take over Potash will decide how much of a factor that played in the sector.
At minimum if they are rejected, will see some pull back in the stocks. If they go forward, they could continue their upward climb for some time.
Another element is how much this will affect the price offered by BHP. They may have to push it up to somewhere in-between the existing share price of Potash and the $130 bid.
Friday, October 15, 2010
Is Potash (NYSE:POT) Source of Bidding Rumors Against BHP (NYSE:BHP)?
In what is an increasingly bizarre reaction to the bid by BHP Billiton (NYSE:BHP) for Potash Corp. (NYSE:POT), another alleged bidder has reportedly left the field, with Sinochem from China reportedly dropping out of the race, according to a Reuters' report.
Canadian Federal Industry Minister Tony Clement has confirmed that, saying “There’s rumors of bidders, but no one has formally” made another bid on the company.
One interesting aspect of the Sinochem circumstance is they evidently dropped out of the running five or six weeks ago, suggesting the ongoing rumors were probably plants by Potash.
It also makes you wonder if the alleged interest of Temasek, the sovereign wealth fund of Singapore, and Canadian pension funds, are really interested at all, or have even made overtures in that direction.
Making a phone call to these entities by Potash doesn't mean they have an interest at all.
The bid by BHP of just under $40 billion is under review under the Investment Canada Act, with a new deadline of November 3.
Other than the noise from Potash and Saskatchewan politicians, most of those commenting on the bid don't think there is much to keep it from going forward.
Canadian Federal Industry Minister Tony Clement has confirmed that, saying “There’s rumors of bidders, but no one has formally” made another bid on the company.
One interesting aspect of the Sinochem circumstance is they evidently dropped out of the running five or six weeks ago, suggesting the ongoing rumors were probably plants by Potash.
It also makes you wonder if the alleged interest of Temasek, the sovereign wealth fund of Singapore, and Canadian pension funds, are really interested at all, or have even made overtures in that direction.
Making a phone call to these entities by Potash doesn't mean they have an interest at all.
The bid by BHP of just under $40 billion is under review under the Investment Canada Act, with a new deadline of November 3.
Other than the noise from Potash and Saskatchewan politicians, most of those commenting on the bid don't think there is much to keep it from going forward.
Tuesday, October 12, 2010
Agrium (AGU), Potash (NYSE:POT), Mosaic (NYSE:MOS) Soar on Lower WASDE Estimates
Agrium (AGU), Potash (NYSE:POT), Mosaic (NYSE:MOS) all surged today after the release of estimates from WASDE showed corn yields area significantly lower than their recent estimate.
UBS (NYSE:UBS) said they are maintaining their "Buy" rating on Agrium Inc. also citing WASDE estimates. Agrium had the price target raised from $82 to $95.
"WASDE released its latest agriculture estimates this morning (Monday) which we believe indicate an improving agricultural market. Specifically, projected corn production for 2010/11 is down with the projected national corn yield of 155.8 bushels/acre significantly below the previous projection of 162.5 bushels/acre ... We have revised our 2011/2012 EPS estimates from $6.70/6.57 to $6.92/6.60 to reflect stronger fertilizer pricing and fundamentals," said UBS.
Agrium closed Monday at $83, gaining $1.92, or 2.37 percent. Mosaic ended the session at $66.32, an rising $1.02, or 1.55 percent. Potash continues its climb, closing the day at $147.48, an increase of $1.68, or 1.15 percent.
UBS (NYSE:UBS) said they are maintaining their "Buy" rating on Agrium Inc. also citing WASDE estimates. Agrium had the price target raised from $82 to $95.
"WASDE released its latest agriculture estimates this morning (Monday) which we believe indicate an improving agricultural market. Specifically, projected corn production for 2010/11 is down with the projected national corn yield of 155.8 bushels/acre significantly below the previous projection of 162.5 bushels/acre ... We have revised our 2011/2012 EPS estimates from $6.70/6.57 to $6.92/6.60 to reflect stronger fertilizer pricing and fundamentals," said UBS.
Agrium closed Monday at $83, gaining $1.92, or 2.37 percent. Mosaic ended the session at $66.32, an rising $1.02, or 1.55 percent. Potash continues its climb, closing the day at $147.48, an increase of $1.68, or 1.15 percent.
Monday, October 11, 2010
BHP (NYSE:BHP) Claims Tax Revenue More than Conference Board Estimates
Head of non-ferrous at BHP Billiton (NYSE:BHP), Andrew Mackenzie, said the findings of the Conference Board of Canada that over a period of ten years the province of Saskatchewan would lose as high as $2 billion from the acquisition of Potash Corp (NYSE:POT) and the development of the Jansen mine, is overstated.
Mackenzie says the province would probably actually gain tax revenue during that period rather than lose revenue. Most of the tax benefits are simply being deferred, so on the front end there will be less taxes, but on the back end a huge increase in taxes, according to Mackenzie.
The Board did admit over a period of time the acquisition of Potash by BHP would probably end up benefiting the province and Canada in general.
Even so, the report said "the (PotashCorp) acquisition would allow the company to organize its affairs in such a way as to minimize corporate taxes paid to the province."
The question is: so what? That's why tax laws and deductions are in place, in order to stimulate business deals which benefit everyone over the long run.
The reason BHP claims tax revenue is understated even on the front end, is the number of workers on the construction phase of the projected were vastly underestimated. The Conference Board said made their determination based on 1,000 people working during that phase, when in fact it would be closer to 4,000 during the peak of the work.
That's a lot more taxes from 4,000 workers than the 1,000 workers assumed by the Board. Workers also spend money generating more tax revenue for the province, added Mackenzie.
This is about an unholy alliance between the Canadian government and the cartel, monopoly of Canpotex, which has been fixing prices for a long time in order to control and support margins in the business.
Canpotex includes competitors (if you could identify them as such) Agrium (NYSE:AGU) and Mosaic (NYSE:MOS).
The illogical and unreasonable response from Potash and the Canadian province, which was more emotional than practical, reveals this isn't really about paying a good price for the company or anything else. It's about the monopoly and price controls resulting from the potash monopoly, and by extension, Saskatchewan monopoly, that has created all the emoting.
Mackenzie says the province would probably actually gain tax revenue during that period rather than lose revenue. Most of the tax benefits are simply being deferred, so on the front end there will be less taxes, but on the back end a huge increase in taxes, according to Mackenzie.
The Board did admit over a period of time the acquisition of Potash by BHP would probably end up benefiting the province and Canada in general.
Even so, the report said "the (PotashCorp) acquisition would allow the company to organize its affairs in such a way as to minimize corporate taxes paid to the province."
The question is: so what? That's why tax laws and deductions are in place, in order to stimulate business deals which benefit everyone over the long run.
The reason BHP claims tax revenue is understated even on the front end, is the number of workers on the construction phase of the projected were vastly underestimated. The Conference Board said made their determination based on 1,000 people working during that phase, when in fact it would be closer to 4,000 during the peak of the work.
That's a lot more taxes from 4,000 workers than the 1,000 workers assumed by the Board. Workers also spend money generating more tax revenue for the province, added Mackenzie.
This is about an unholy alliance between the Canadian government and the cartel, monopoly of Canpotex, which has been fixing prices for a long time in order to control and support margins in the business.
Canpotex includes competitors (if you could identify them as such) Agrium (NYSE:AGU) and Mosaic (NYSE:MOS).
The illogical and unreasonable response from Potash and the Canadian province, which was more emotional than practical, reveals this isn't really about paying a good price for the company or anything else. It's about the monopoly and price controls resulting from the potash monopoly, and by extension, Saskatchewan monopoly, that has created all the emoting.
Tuesday, October 5, 2010
Potash (NYSE:POT) Claims Study Revenue Numbers too High
Potash Corp. (NYSE:POT), which is battling to keep from being taken over by BHP Billiton (NYSE:BHP), says a study commissioned by the Canadian province of Saskatchewan has tax revenue less than they believe it will be if BHP takes over the fertilizer company.
A report released by the Conference Board of Canada, said there would be "few" negative outcomes if BHP took over Potash, saying over a 10-year period they would amount of about $1.96 billion.
Potash lashed out at the findings, saying the figure was too low because the study didn't take into account BHP mining potash at full production.
What they mean by that is more potash on the market would lower prices, and ultimately margins, resulting in lower earnings. What Potash on the other hand neglects, is increased sales, even if at lower earnings, makes up for the loss of margins. Think Wal-Mart (NYSE:WMT) and how they turn inventory over to make up for lower margins.
So the idea there will be a lot of tax revenue lost is largely hypothetical, and can in no way be proven.
It seems there's really no reason BHP shouldn't be given the go ahead to acquire Potash other than a few people at the top of the company who may end up losing their jobs.
Otherwise the response by Potash isn't reasonable or logical. It's not that hard to figure out there's really not a reason for BHP to take over the company, and in the long run could be a major boon for farmers and others who would be able to acquire fertilizer at better prices, which would increase sales and tax revenue.
A report released by the Conference Board of Canada, said there would be "few" negative outcomes if BHP took over Potash, saying over a 10-year period they would amount of about $1.96 billion.
Potash lashed out at the findings, saying the figure was too low because the study didn't take into account BHP mining potash at full production.
What they mean by that is more potash on the market would lower prices, and ultimately margins, resulting in lower earnings. What Potash on the other hand neglects, is increased sales, even if at lower earnings, makes up for the loss of margins. Think Wal-Mart (NYSE:WMT) and how they turn inventory over to make up for lower margins.
So the idea there will be a lot of tax revenue lost is largely hypothetical, and can in no way be proven.
It seems there's really no reason BHP shouldn't be given the go ahead to acquire Potash other than a few people at the top of the company who may end up losing their jobs.
Otherwise the response by Potash isn't reasonable or logical. It's not that hard to figure out there's really not a reason for BHP to take over the company, and in the long run could be a major boon for farmers and others who would be able to acquire fertilizer at better prices, which would increase sales and tax revenue.
Wednesday, September 29, 2010
BHP (NYSE:BHP) Acquisition of Potash (NYSE:POT) Good for Market
The reason so much resistance has emerged from the BHP Billiton (NYSE:BHP) bid for Potash Corp. (NYSE:POT) has been the socialist nature of the agricultural industry in general, and the potash industry in particular.
With the Canpotex consortium and the Belarusian Potash Co., they pretty much control the potash market and its prices. That needs to end and free market prices allowed to determine how much the fertilizer will cost.
In the case of Potash, the Canadian Province of Saskatchewan sucks a bunch of money out of them, the reason they want things to continue on as they are with controlled prices, rather than allowing the market to dictate events.
The Canadian consortium includes Agrium (NYSE:AGU) and Mosaic (NYSE:MOS), along with Potash. They oppose the acquisition by BHP as well, as they would have to compete with them directly, rather than continue the cozy relationship among one another.
Competition is always the best way to decide who wins in business, and to keep Canpotex operational goes against that idea, as well as keeps the costs of Potash artificially high.
Interestingly, China is concerned about higher prices of Potash if BHP takes over the fertilizer giant, and the Province of Saskatchewan is concerned about lower prices if they do.
All that government has to do is start to become more limited, the best way to deal with out-of-control spending and promises.
Either way, BHP is good for the industry, and whether they land Potash or not, they'll eventually ramp up their Jansen property, which may produce 8 million tons of potash a year.
With the Canpotex consortium and the Belarusian Potash Co., they pretty much control the potash market and its prices. That needs to end and free market prices allowed to determine how much the fertilizer will cost.
In the case of Potash, the Canadian Province of Saskatchewan sucks a bunch of money out of them, the reason they want things to continue on as they are with controlled prices, rather than allowing the market to dictate events.
The Canadian consortium includes Agrium (NYSE:AGU) and Mosaic (NYSE:MOS), along with Potash. They oppose the acquisition by BHP as well, as they would have to compete with them directly, rather than continue the cozy relationship among one another.
Competition is always the best way to decide who wins in business, and to keep Canpotex operational goes against that idea, as well as keeps the costs of Potash artificially high.
Interestingly, China is concerned about higher prices of Potash if BHP takes over the fertilizer giant, and the Province of Saskatchewan is concerned about lower prices if they do.
All that government has to do is start to become more limited, the best way to deal with out-of-control spending and promises.
Either way, BHP is good for the industry, and whether they land Potash or not, they'll eventually ramp up their Jansen property, which may produce 8 million tons of potash a year.
Monday, September 27, 2010
Potash (NYSE:POT) Hearing Date Over BHP (NYSE:BHP) Bid Extended by Judge
Saying the parameters for gathering information for the discovery phase of a motion by Potash Corporation (NYSE:POT) to halt the attempt by BHP (NYSE:BHP) to take over the company is too broad, Judge David Coar extended the hearing date to November 4.
BHP responded saying, "We are gratified that the court made clear that the Potash Corp. discovery proposals are excessively broad. We believe the case is without merit and we intend to contest it vigorously, including by filing a motion to dismiss later this week."
While allowing a request for discovery to go forward, the judge gave the responsibility for narrowing the parameters of discovery to a federal magistrate.
The judge evidently took into consideration the expiration date of the offer from BHP, where they've given Potash shareholders until November 18 to tender their shares. Otherwise they may have had to extend their expiration deadline to compensate for it.
BHP responded saying, "We are gratified that the court made clear that the Potash Corp. discovery proposals are excessively broad. We believe the case is without merit and we intend to contest it vigorously, including by filing a motion to dismiss later this week."
While allowing a request for discovery to go forward, the judge gave the responsibility for narrowing the parameters of discovery to a federal magistrate.
The judge evidently took into consideration the expiration date of the offer from BHP, where they've given Potash shareholders until November 18 to tender their shares. Otherwise they may have had to extend their expiration deadline to compensate for it.
Thursday, September 23, 2010
Potash (NYSE:POT) Seeks to Block BHP (NYSE:BHP) in U.S. Court
Their latest move against BHP Billiton (NYSE:BHP) by Potash Corp. (NYSE:POT) is to file a complaint against the mining company in U.S. court in hopes of blocking the hostile takeover attempt.
BHP is being accused by Potash of making false and misleadings statements when making the $38.6 billion bid for the fertilizer company.
Potash's board of directors and CEO called the offer "wholly inadequate" at the time.
With only 50 percent of shareholders needing to support the BHP offer, Potash labled BHP as being "unusually coercive," citing the usual two-thirds majority needed to support bids for other companies.
BHP is being accused by Potash of making false and misleadings statements when making the $38.6 billion bid for the fertilizer company.
Potash's board of directors and CEO called the offer "wholly inadequate" at the time.
With only 50 percent of shareholders needing to support the BHP offer, Potash labled BHP as being "unusually coercive," citing the usual two-thirds majority needed to support bids for other companies.
Wednesday, September 22, 2010
BHP (NYSE:BHP) Says Potash (NYSE:POT) Deal Must Add Value
BHP Billiton (NYSE:BHP) CEO Marius Kloppers said he wouldn't increase the offer for Potash Corp. (NYSE:POT) to a place where it would provide good value for the shareholders of BHP (NYSE:BHP).
At the same time, Kloppers reiterated he isn't concerned about the rumor of a rival bid for Potash, as his is the only offer on the table.
Rather said Kloppers, he's focusing on navigating his way through regulatory hurdles and seeking political support in Canada.
He also reiterated that he wouldn't hesitate to walk away from the process if rival bids do emerge and they become too high.
"If somebody offers a price at which we cannot demonstrate value for
our shareholders, we're probably not going to show, and I think that
continues to be the case," Kloppers said.
Concerning what is considered one of the largest stumbling blocks, the eventual leaving of Canpotex, which is basically a price-fixing cartel, although also a marketing arm of Potash, Mosaic (NYSE:MOS) and Agrium (NYSE:AGU), Kloppers said market-based pricing would ultimately generate more revenue than the price-fixing of the cartel.
In other words, margins aren't everything, and the increased amount of sales from market prices would surpass the higher prices set by Canpotex, in Kloppers' view.
At the same time, Kloppers reiterated he isn't concerned about the rumor of a rival bid for Potash, as his is the only offer on the table.
Rather said Kloppers, he's focusing on navigating his way through regulatory hurdles and seeking political support in Canada.
He also reiterated that he wouldn't hesitate to walk away from the process if rival bids do emerge and they become too high.
"If somebody offers a price at which we cannot demonstrate value for
our shareholders, we're probably not going to show, and I think that
continues to be the case," Kloppers said.
Concerning what is considered one of the largest stumbling blocks, the eventual leaving of Canpotex, which is basically a price-fixing cartel, although also a marketing arm of Potash, Mosaic (NYSE:MOS) and Agrium (NYSE:AGU), Kloppers said market-based pricing would ultimately generate more revenue than the price-fixing of the cartel.
In other words, margins aren't everything, and the increased amount of sales from market prices would surpass the higher prices set by Canpotex, in Kloppers' view.
Citigroup (NYSE:C) Says BHP (NYSE:BHP) Deal for Potash (NYSE:POT) May Not Go Forward
Citigroup (NYSE:C) said the $40 billion offer for Potash Corp. of Saskatchewan Inc. (NYSE:POT) by BHP Billiton (NYSE:BHP) is in danger of failing, as the company will probably not be willing to increase its bid, and the possibility of a white knight emerging is highly unlikely, even with all the talk about interests from China.
“The probability of a white knight or of BHP overpaying is low, in our view, hence we see a risk that the deal may not proceed,” the Citigroup analysts wrote in a note.
Marius Kloppers, BHP’s chief executive officer, has been holding firm to the original bid of $130 a share, and has given no indication he would be willing to sweeten the offer.
That would be tested if rumors of a Chinese bid were to become a reality.
Kloppers will meet with Canadian lawmakers on Wednesday talk about the bid after pressure for the transaction to be reviewed.
“The probability of a white knight or of BHP overpaying is low, in our view, hence we see a risk that the deal may not proceed,” the Citigroup analysts wrote in a note.
Marius Kloppers, BHP’s chief executive officer, has been holding firm to the original bid of $130 a share, and has given no indication he would be willing to sweeten the offer.
That would be tested if rumors of a Chinese bid were to become a reality.
Kloppers will meet with Canadian lawmakers on Wednesday talk about the bid after pressure for the transaction to be reviewed.
Tuesday, September 21, 2010
Canada Questioning BHP's (NYSE:BHP) Potash (NYSE:POT) Bid
The Canadian government is attempting to sway public opinion against the bid by BHP Billiton Ltd. (NYSE:BHP) for Potash Corporation of Saskatchewan (NYSE:POT), generating the question on whether or not the bid is good for the Canadian province.
The premier of Saskatchewan, Brad Wall, said, "The question needs to be, 'Are Saskatchewan people, are Canadians better off as a result of this, is our economy stronger as a result of this very large deal?'". We're doing our homework, we'll see what all of that due diligence tells us, but as of today I'm having a hard time answering that question in the affirmative."
This is all smoke and mirrors, as the real issue is the Canadian province extracts royalty fees from Potash, and the announcement by BHP they weren't interested in continuing on with the marketing arm Canpotex, is what's really behind the "better for Canada" issue.
Canpotex is the consortium of Potash, Mosaic (NYSE:MOS) and Agrium (NYSE:AGU), which in reality are a monopoly controlling potash prices in this part of the world.
They are afraid, and rightly so, that BHP will abandon the monopoly once the existing agreements run out, which would lower the price of the fertilizer and Saskatchewan wouldn't receive as much in fees as they had been.
This shouldn't be any of the business of the Canadian government, as they shouldn't have any say in non-legal matters of a company and how it is run or whether it is acquired or not.
Since when does a business equate to a quasi-government entity, where clueless politicians consider an asset of the country and not the shareholders or individuals which own it?
The premier of Saskatchewan, Brad Wall, said, "The question needs to be, 'Are Saskatchewan people, are Canadians better off as a result of this, is our economy stronger as a result of this very large deal?'". We're doing our homework, we'll see what all of that due diligence tells us, but as of today I'm having a hard time answering that question in the affirmative."
This is all smoke and mirrors, as the real issue is the Canadian province extracts royalty fees from Potash, and the announcement by BHP they weren't interested in continuing on with the marketing arm Canpotex, is what's really behind the "better for Canada" issue.
Canpotex is the consortium of Potash, Mosaic (NYSE:MOS) and Agrium (NYSE:AGU), which in reality are a monopoly controlling potash prices in this part of the world.
They are afraid, and rightly so, that BHP will abandon the monopoly once the existing agreements run out, which would lower the price of the fertilizer and Saskatchewan wouldn't receive as much in fees as they had been.
This shouldn't be any of the business of the Canadian government, as they shouldn't have any say in non-legal matters of a company and how it is run or whether it is acquired or not.
Since when does a business equate to a quasi-government entity, where clueless politicians consider an asset of the country and not the shareholders or individuals which own it?
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