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Reportedly, Potash (POT) is considering joining forces with global firms that would be able to present an offer to compete with BHP Billiton's (BHP) $38.6 billion bid.
According to The Wall Street Journal, people "familiar with the matter" stated that there could be a global consortium in the works to make a counteroffer for Potash. BHP has gone straight to Potash shareholders with its offer of $130 per share.
According to the Journal report, Potash's CEO said that the company is "not opposed to a sale," rather Potash is "opposed to a steal of the company." The fertilizer firm told BHP that its original offer "grossly undervalued" the company.
Elsewhere, a report surfaced in a Hong Kong newspaper that another Chinese firm could put in a competing offer for Potash. As JPMorgan noted, the entire country of China is "dependent upon potash exports," making the country a major customer of Potash.
As you can see on this chart, Potash definitely benefits from all this takeover talk. The stock may be able to challenge July 2008 highs thanks to this perceived bidding war. The problem is that Potash is having its value determined by potential suitors; of course, with a bidding war in place, there is no limit to what another company will pay. If Potash is able to put together a consortium, it will to issue a bid that it feels is fair value for the company, which could drive competing bids even higher. Potash is in a good situation right now.
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