This week or next will see a bid from China for Potash Corp. of Saskatchewan (POT), Canada’s Globe and Mail is reporting.
The newspaper’s sources say Beijing is now deciding which of the proposed bids from China’s state-owned companies it should back. Pending Chinese national holidays beginning on October 1 argue for a decision this week or next.
Among the Chinese companies interested in topping the $38.6 billion bid by Australia’s BHP Billiton (BHP) for the Canadian fertilizer company are, according to the Globe and Mail, the state-owned chemical group Sinochem, which has proposed paying as much as $60 billion, and China Blue Chemical, a division of China National Offshore Oil Corp.
A Chinese bid has become more likely in recent weeks, in my opinion, as news reports have confirmed China’s swing this year to a corn importer from previous self-sufficiency in corn, and as the price of corn has climbed to $5 a bushel on forecasts of a slightly smaller harvest in the United States. China is known to want to assure a supply of fertilizer, a key ingredient if the country is to have any hope of increasing domestic food production on its limited base of agricultural land. (A $60 billion bid, though, seems way out of line, especially now that Potash has filed suit asking for an injunction that would halt BHP Billiton’s offer.)
BHP Billiton has refused to add to its bid, despite a response from Potash of Saskatchewan that called the price offered too low, until a second bidder actually puts an offer on the table.
The next week or two will show whether or not there is, as Potash has repeatedly said there would be, another bidder. A Chinese offer—and maybe even a report of a Chinese offer—will drive up the price of other fertilizer stocks.
I really wanted to buy into the fund but alas, I live in Canada and the offering is not available to us. If things were otherwise, I’d likely sink 10% of my overall portfolio into it.
Jury is still out on what happens with POT bids, but Ryan is right so far. He said buy at 85 when Jim said buy; he said buy at 110 when Jim said sold, he said don’t sell at 142 the day of the BHP bid and the stock went up to 153 in the week following and bounced between 147 and 152 the last four weeks or so. So by my reckoning he’s 3 for 3 so far. Not a bad crystal ball…
Just because there is no other offer, and none ever materializes, does not mean BHP gets the company at 130. I don’t see a lot of the big institutional investors rushing to sell at 150; why would they accept the tender offer at 130?
There was no white knight or other offeror for RTP and BHP raised its offer before closing the deal. Same with Kraft and Cadbury.
This poker game is a long way from being over, and regardless of who wins, it’s been fun to watch.
Where is ryanpatrik when we need him? He was a stud on Potash. Told Jim he was nuts to sell and predicted the takeover…….I’d like to hear his opinion if he would care to share it.
Piling on [JUBAX]
I bot some for myself the day it was available @ Vanguard, and so did my sister [don’t know about my sister’s dog.]
Thanks Jim
I considered jubax, through Vanguard. The expense ratio seemed high.
ogowan,
Check out this article:
http://www.fool.com/investing/general/2010/09/17/10-companies-raising-receivables-red-flags.aspx
It seems DGW’s accounts receivable are rising faster than their gross sales. Bad sign.
I’m dissappointed to see the level of analysis Jim has put into this stock, so much so I’m reluctant to invest in his global fund at that expense ratio. The real questions – would a Chinese bid have any chance of success as this is not unlike CNOC trying to take over Chevron.? Secondly, Jansen will bring 8 million tonnes on the market. What would this do to Potash margins? For BHPB, this is a volume play, they will produce flat out as long as they are making a profit on the incremental tonnage, and they control the incremental volume. An additional 8 million tonnes will destroy Potash margins as a stand alone company. If you own this stock, sell now as absent a deal it is under $100. Comments, Jim?
Took a flier on Whirlpool at 79.50
Looking for encouraging real estate numbers.
Puts are at record levels.
Anybody have a clue on DGW. Lookin for a little help! Anyone???????
Surfsup:
I can’t find the holding of the fund either. I would very much like to see them. The expense ratio is rather high and i would like to see what is in the fund.
My mistake on the enthusiasim
Get JUBAX on the Ameritrade platform!
Here is a thorough article about the POT deal:
http://www.thestreet.com/story/10850188/1/potash-vs-bhp-the-fertilizer-war-from-a-to-z.html
I bought JUBAX through Schwab yesterday, but don’t know how to get the free subscription.
Also waiting for JUBAX to be available through TD Ameritrade.
Jim, I noticed that it is available through Vanguard as the ‘first’ of the brokerages. Please hurry with the on-line brokerages. Would you be able to tell us which on-line brokerages are next or are / are not being sought, or should I go through the tedious application process at Vanguard or other brokerage?
Thanks.
I have a small investment in JUBAX. Can anyone tell me how I can see the holdings that make up this fund? Can’t seem to find it on the fund’s online site. Thank-you!
I’m planning to invest some in JUBAX, but also waiting to buy through my scottrade account. Not super happy about having to wait for the free subscription (whine).
Jim and all,
Both AGU and MOS have moved WAY up since BHP’s hostile offer for POT. Are these two still worth buying at these levels?
If not, which other fertilizer or agriculture stocks might benefit from a rival bid for POT? Thanks.
I’m actually very interested in the fund, but I’d prefer to wait until I can buy shares through my brokerage of choice (Wells Fargo). I’m willing to wait because I already have a portfolio substantially similar to the makeup of that fund. (I do not consider myself an experienced trader, though, and would prefer not to have to manage it myself–thus my preference for the mutual fund.)
I’m still wishing that Jim had not made a sell recommendation for POT back on April 29. The only consolation is that I at least made a profit. Having said that, I just put 10K into JUBAX and am already enjoying my free subscription to his new Jubak Asset Management Internet newsletter. Is that the enthusiasm you were looking for?
I know we want to talk about Potash, but I have another thought. I do not read a lot of enthusiasm for Jim’s Global Equity Fund. Why?
When Jim bought WHR, I whined that buying 100 shares would deplete my speculative money, my gambling money. A couple of oh-so-kind fellas said I should just buy OAKBX and stay on the porch waiting for the oxygen.
Well, all that changed. I can invest some real money – $500 minimum – and own all of Jim’s picks. I, for one, think that owning a little JUBAX will be more that casually interesting. I’m in.
But, I still wonder: Where is the enthusiasm?