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Potash (POT) takeover by BHP Billiton (BHP) has been quashed by Tony Clements Canada’s Industry Minister and Steve Harper Federal Prime Minister. The move is a surprise but some say reflects local political realities. Investors who were promised a better takeover offer which now seems to be a non event are about to lose billions of dollars of valuation.
BHP you have 30 days to improve the net benefits. stop thinking like business men and start thinking like politicians. This has become a political decision. The next question is who will shareholders sue. The premium will evaporate. why should investors be penalized.
Lawyers start your engines.
Disclosure: George Gutowski writes from a caveat emptor perspective. I do not hold any positions in stocks mentioned in this post.
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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.