TORONTO (Reuters) – Shares of Potash Corp of Saskatchewan rose five percent Oct. 19 after a research report touted the idea that mining giant BHP Billiton could afford to make an all-cash bid for the world’s largest fertilizer maker.
Bank of America Merrill Lynch analyst Jason Fairclough suggested that an all-cash bid for PotashCorp at a 30 percent premium could add to BHP earnings by 13 percent within a year or two of closing an acquisition.
Shares of Saskatoon-based PotashCorp. were up five percent at $106.08 in Toronto and 5.2 percent to $102.45 US on the New York Stock Exchange in early trade Oct. 19. Shares of U.S.-based rival Mosaic Co. were up 3.2 percent at $53.27 in New York.
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The potash industry has been rife with speculation for months that Mosaic or PotashCorp might be takeover targets for mining giants like Australia’s BHP or Brazilian rival Vale.
BHP has clearly stated its intention to expand into the potash business. It acquired the Jansen project in Saskatchewan in 2008 and has been studying the feasibility of building a potash mine at the site.
Fairclough noted that a BHP takeover of PotashCorp would provide the mining major with instant scale in the sector, while also giving it large, long-life, low-cost assets.
