The current battle in the ongoing fertilizer wars has provided industry watchers with some colorful entertainment. In contrast, the recent CF - Terra - Agrium contest was a methodical war of attrition and tactics, featuring lawyers, investment bankers...and death by press release.
In the Potash Battle we have colorful gladiators hacking away at each other with dueling press conferences, challenging the Queensberry Rules of M&A. The round-off error is Billions not Millions and they are on a world stage.
Surrogates have entered the battle. Governments of various stripe are taking positions both to protect the potash prairies, and as potential buyers.
The Provincial government is arguing to protect Canpotex, a monopoly marketing association while we have BHPB, a major multinational resisting pressure to join the association; which no doubt they would control...
"Oh please Br'er Fox, whatever you do, please don't throw me into the briar patch." Br'er Rabbit
Where do we go from here? In our opinion, PotashCorp is in play; Bill Doyle has admitted as much (Washington Post 18 August 10). In an otherwise horrible equity market, this is one opportunity for the hedge funds to turn a profitable trade. So it appears to be just a matter of price...but who can claim to have ever gotten an easy price from Bill Doyle?
Therefore what is the market potential for the "The Saudi Arabia of Potash" (PotashCorp presentation 17 August 10)? This deal is too big for potential financial buyers as today's credit markets won't support a deal this size. So this leaves strategic buyers and this list is pretty short as Marius Kloppers has pointed out. Does the Saskatchewan Government really want the Chinese government, or other buyer aligned entities, as their potash partner?
Can and will BHPB raise their bid if they have to? You bet.
