Overflowing potash need is catalyst in BHP hostile takeover bid

For individuals within the agricultural industry, potash has been a hot topic lately. Potash is essentially potassium, one of the critical nutrients that make modern agricultural yields possible. There is no choice source for potassium in fertilizer. Food wouldn’t be here without the help of potash. Because there is no futures market for potash, other minerals have outperformed it in a recent commodities market boom. However, a huge increase in demand for potash is within the forecast. A Canadian potash business may be in trouble. An Australian minerals business wants the profit and is seeking to make a hostile takeover. Article source – Exploding potash demand is catalyst in BHP hostile takeover bid by Personal Money Store.

Potash urges shareholders to resist BHP tender

Potash Corporation of Saskatchewan, known as Potash, has control over a big chunk of the world’s potash market. BHP Billiton, a big minerals extraction company out of Australia, desperately wants to buy the Canadian fertilizer giant. The New York Times reports how much BHP is willing to pay to get their hands on the business. The offer was $ 130 a share. The Potash board rejected the offer as too low. In response, BHP launched a hostile takeover of Potash by beginning a tender offer for the exact same price, which means BHP is dangling the cash directly in front of shareholders. Potash is trying to get a better offer from another when getting shareholders to stop selling to BHP.

World would go hungry without potash

12 countries actually make potash. Potash is dominated by Canada, Russia, Belarus and Germany. This is because they create 75 percent of all the potash. According to Reuters, fertilizers need potash. Potash is really just what you call anything that is potassium. Potash strengthens a plant’s resistance to disease, improves crop quality and boosts yields. It is the only existing source for potassium in fertilizer. For years, the price of Potash has been very volatile. If you bought potash 10 years ago, you could buy it for cheap. It was only $ 150 a ton. The global food crisis happened in 2007-08. This was when potash prices went up to $ 1,000 a ton. Since then, it has crashed to about $ 350-$ 375 a ton.

More people want Saskatchewan potash

Potash has been ignored lately. It took the moves by BHP for any person to recognize its existence. As outlined by Entrepreneur, by 2011, there won’t be enough supply of potash if the growth continues as it has in the last five years. China, Latin America and India are all examples of places where meat consumption has gone up which is why this forecast was made. An additional reason for this is the biofuels such as ethanol that are exploding. 25 percent of energy within the world could run off of biofuels in 20 years says the UN. Both of these trends are already spiking wheat and corn prices, and portend a huge increase in potash demand. It is hard to make more potash though. There are more than 25 years put into 85 percent of the potash mines right now. It seems extremely hard to produce more potash. The Saskatchewan company experiences this problem.

Discover more information on this subject

New York Times

dealbook.blogs.nytimes.com/2010/08/20/bhp-begins-tender-offer-for-potash/?src=busln

Reuters

reuters.com/article/idUSTRE67J2SQ20100820

Entrepreneur

entrepreneur.com/tradejournals/article/166229304.html