Potash Prices Prove Canada Was Right

 |  Includes: BHP, POT
by: Mark McQueen

The world didn’t end, after all.

It was less than a month ago that "BNN TV Squeeze Play" co-host Rudyard Griffiths asked me a fair question: Why shouldn’t Potash (NYSE:POT) shareholders be able to sell to BHP Billiton (NYSE:BHP) for C$145/share? At the time, market rumours suggested that to win over the Potash board, BHP would raise its bid from C$130 to something like C$145. Being a free-marketer, Mr. Griffiths likely thought I’d lost my mind by advocating that Canada wise up to the uneven global playing field when it comes to takeovers of important resource assets or national corporate champions (as I stated here.)

When Industry Minister Tony Clement turned the proposed BHP/Potash deal down, there was much caterwauling about Potash’s hard-done shareholders: They’d been denied their chance for a great takeout price, blah, blah, blah.

Well, POT closed at C$145.40 last night. If you wanted to tender to BHP at C$145/share, it’s now yours for the taking on the TSX; the extra 40 cents will cover the trading commission. And Saskatchewan won’t lose billions in tax revenue. Aren’t you glad Mr. Clement stood up for Canada?

Disclosures: I own POT and am short Dec. POT calls.