The big news on Wall Street today is BHP Bilton’s unsolicited takeover bid for Potash Corp – the world’s largest fertilizer producer. The bid has Wall Street aflutter that more acquisition bids may be lurking out there (party like it’s 2006!)
Potash was a Wall Street favorite during the agricultural commodity boom of 2007-2008. The booming demand for gains meant unlimited demand for fertilizer as far as the eye could see!
Potash’s exponential rise ended like most tequila-centered evenings – poorly. But it has since more-than-doubled off its late-2008 lows, and now is playing hard-to-get at BHP’s acquisition offer.
Potash, like most agriculture, is probably a good medium to long term play. I am still wary about the short term, as grain stocks are at decent levels – perhaps not justifying the current price levels of cotton, corn, soybeans, and especially wheat. If the grains get knocked on their asses again during another wave of deflation, that might present a fantastic buying opportunity for us agricultural commodity bulls.
Part of me can’t help but wonder where BHP’s bid was when Potash’s share price was spiking below $50.