Potash Corp (POT) is trying to fend off a takeover offer from BHP Billiton (BHP). Powerful provincial governments are campaigning to turn aside BHP’s offer. Investment Canada a Canadian Federal Regulator has ruled OK on the deal. No one can think of a sound economic reason to say no. Left wing oriented provincial governments are trying to disrupt a deal the average citizen does not truly understand.
My message to the Marxist Leninists: The Potash cannot be moved until it is extracted and sold. Production jobs will not be affected by this deal. Production jobs will be affected by levels of world demand. Investors who own the resource should be allowed to sell it if they want. Those are the rights of ownership. Resources are there to be extracted and sold.
The Canadian Federal Prime Minister Steve Harper who wants a majority government is facing a public populist swell insisting that the resource stay in Canadian Hands. Privately the economic world is warning against left-wing resource grabs which have hurt Canada in the past.
If I was BHP I would allow myself to enter into a political deal showing huge supposed benefits for the local population. If the deal is not agreed to the benefits do not occur. Potash Corp controls some 22% of world supply. Populist thinking assumes a near monopoly. 22% can be made to suffer as other deposits are favoured. Where will the left wingers be as local production employees suffer and other potash suppliers thrive?
Tony Clement, the federal Minister of Industry, is expected to announce this week his decision whether a BHP takeover.
Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.
- No decision on PotashCorp takeover yet: Clement (ctv.ca)
- Opponents turn up heat as potash takeover decision nears (thestar.com)
- Investment Canada has not blessed Potash deal, Clement says (thestar.com)
- Potash Buyout Heats Up (POT, BHP) (247wallst.com)
- The anti-potash coalition: undermining investment (theglobeandmail.com)
- Owners should get final say (financialpost.com)
- Canada Splits on Foreign Bid for Potash (online.wsj.com)