We give a lot of credibility to the Deal Blog's view on mergers. Given that the BHPB vs. PotashCorp battle field is transnational, Professor Steven Davidoff is cautious in framing the issues: As BHP Waits, the Next Steps for Potash. His insight is nevertheless useful as this is a complicated test of conflicting interests.
BHPB has offered a clean cash price, but the shareholders are signaling that they want more. BHPB has signaled that if successful, they intend to run at full capacity. In the short run this should be good for farmers, not to mention consumers of food, but the Saskatchewan government is wincing because this may reduce their royalty payments. The Chinese government is a big buyer of potash and they are making noise as well. They want cheap plentiful supply, and who could take issue with that thinking ...except for say the Saskatchewan government and PotashCorp's shareholders.
The Canadian federal government is positioned by law as a gatekeeper. One could argue though that the horse is already out of the barn. It is possible that if BHPB agrees to move PotashCorp's headquarters back to Saskatoon, and promises to "buy local" and be a good Canpotex family member, that they will earn the necessary Social License required by Ottawa.
We continue to doubt that a White Knight will appear. Anything less than this will only delay the inevitable as Professor Davidoff suggests. One other time factor is the current "tax the rich" movement in Washington. If the Obama administration is successful, long term holders of PotashCorp shares (including management) will be facing an additional haircut after 31 December. We therefore could see selling pressure as the year end approaches.