DealZone

from Breakingviews:

Waiting game may favor BHP in Potash battle

BHP Billiton is playing a waiting game. The longer regulators take to approve the miner's $38.6 billion offer for Canada's Potash Corporation of Saskatchewan, the more time there is for a rival bid to emerge. Yet any white knight is bound to face similar scrutiny. BHP's one-month head start in the lengthy process could prove to be a tactical advantage.

To be successful, the Anglo-Australian miner's bid must get past competition authorities in Canada and the United States. It also needs to win approval from foreign investment bodies including Investment Canada and the Committee on Foreign Investment in the United States.

Canada's competition regulator has already asked for more information, forcing BHP to extend its $130-per-share offer for Potash Corp. by a month. If the U.S. competition authority follows suit, the process could drag into next year.

BHP's current business doesn't overlap much with the fertiliser group. But the Canadian authorities probably want to examine the impact of the miner's plan to leave Canpotex -- the North American potash marketing cartel -- and sell its output independently. As a large importer of potash, the U.S. antitrust body is also bound to look closely at the deal.

Any delay would appear to favour Potash Corp's efforts to drum up other bids. Yet rivals would need to go through the same process as BHP. And lawyers believe that regulators would prefer to look at different buyers in turn, rather than examining them in tandem. That could play into BHP's hands.

Deals wrap: Sinochem keeps an eye on Potash deal

Pedestrians walk past the head office of BHP Billiton in central Melbourne September 22, 2010. REUTERS/Mick Tsikas As regulators mull over BHP Billiton’s bid for Potash, China’s Sinochem has hired banks to advise it on how to foil the deal, two sources told Reuters. *View article *View article on the politics of the deal

The New York Times takes a look at vulture investor Randall D. Smith as he circles the newspaper industry. *View NYT article

Tech companies are flush with cash and on the hunt for growth, reports Forbes. Here are some deal predictions in the sector. *View Forbes article

Deals wrap: Waiting on the regulators

A front loader filled with potash is seen in Colonsay, Saskatchewan September 24, 2009.  REUTERS/David Stobbe BHP Billiton’s $39 billion battle to take control of Potash is expected to drag on into next year after it failed to win immediate backing from Canadian authorities.

“To some extent the longer it drags on, it might be better for BHP because it reduces the tension, although if someone else comes in like the Chinese it is another game,” said Peter Chilton, an analyst at Constellation Capital Management. *View article *View article on the possibility of a counter bid

“In the fast-paced world of Silicon Valley innovation, Google’s chief dealmaker David Lawee puts many a youthful engineer to shame,” writes Alexei Oreskovic. *View article

Deals wrap: Competition for Potash?

Potash Corp mill general superintendent Trevor Berg holds a handful of chicklet potash at a potash holding centre at the Cory mine facilities near Saskatoon, August 19, 2010. REUTERS/David Stobbe   China’s state-owned chemicals group Sinochem has approached Singapore state investor Temasek to join a consortium that may bid for Potash, sources said. It was unclear if this potential consortium will bid to buy a blocking stake or make a full counter offer. *View article

Air Products raised its bid for Airgas to $5.5 billion, the latest salvo in its hostile move on the rival company. *View article

The Justice department is looking into Google’s takeover of airline ticketing software firm ITA Software Inc, to determine whether the deal would exert too much influence on the online travel industry. *View WSJ article *View scores.org graphic on Google’s acquisitions

Deals wrap: Factoring in China

Potash is piled into a large storage facility in Saskatoon after which it is loaded into train cars and transported in this December 2006 file photo. REUTERS/David Stobbe/Files Chinese and other investors have approached at least one big Canadian pension manager about a bid for Canada’s Potash Corp to rival BHP Billiton’s hostile offer. This is one of the first pieces of hard evidence to back up speculation that China is looking for a way to derail a takeover of Potash Corp by the powerful Anglo-Australian miner. *View article *View analysis on possible regulatory action from China *View Globe and Mail article on the concern about jobs and revenue in Saskatchewan

The recent M&A binge certainly suggests corporate treasurers are confident that whatever the near term may bring now is the time to expand. Are we headed for a recovery or is the buying spree just a case of too much money needing a place to go? *View analysis

Genzyme rejected an all-cash $18.5 billion offer from Sanofi-Aventis this week. Will the deal go hostile? Take a look at how events could unfold. *View article

Deals wrap: Whopper deal sealed

Burger King signs at a restaurant in Annandale, VA, August 24, 2010. REUTERS/Kevin Lamarque  Burger King agreed to be bought by investment firm 3G Capital for $3.26 billion. The deal represents a 46 percent premium to Burger King’s share price before news of the deal talks emerged on Wednesday. *View article *View WSJ article on how tasty a Burger King deal is

Hewlett-Packard raised its offer by $3 to $33 per share for 3Par. Shortly after, Dell announced it is bowing out of the bidding war for the data storage company. *View article

China is stepping up attempts to hamper BHP Billiton’s $39 billion hostile offer for Potash Corp, amid worries about future supplies of fertilizer it needs to rapidly boost food production. There is a report that China’s state-run Sinochem has hired HSBC to advise it on options and another which says China is considering launching an anti-monopoly investigation into the deal. *View article *View factbox on Potash supply and demand

from Breakingviews:

Potash CEO’s big payday won’t decide the deal

Half a billion dollars is normally sufficient to sway the minds of mortals. But in the case of Potash Corp's potential sale to BHP Billiton, don't expect such a big payday to decide the outcome of the deal. The fertilizer miner's boss Bill Doyle has sat on larger sums before and held tight. With his golden parachute less than 6 percent of the payoff, he has no obvious incentive to shortchange shareholders with a quick flip of the company.

True, even if Potash shareholders go for the BHP deal on offer Doyle would become one of the top corporate earners of the past decade in North America. And it's hard to imagine that so lucrative a package of stock options as Potash doled out to Doyle was entirely necessary to motivate him over the years.

Still, it is difficult to build up much moral outrage when a $100 investment in the firm when he took over in July 1999 would now be worth $1,746. Not only has the stock soared above Canada's TSX 60 index, it has also dwarfed returns for rivals Mosaic and Agrium.

from Breakingviews:

BHP shows it doesn’t need Potash Corp

BHP Billiton has shown it doesn't need to buy Canada's Potash Corp. The Anglo-Australian miner's impressive annual results are a reminder of the financial firepower behind its $39 billion hostile bid for the world's largest fertiliser group. But they also show that BHP is not broken -- and that chief executive Marius Kloppers does not need to bet a strong balance sheet on further diversification.

The miner can clearly afford to pay more than the $130 per share offer that it has taken directly to Potash's shareholders. BHP generated EBITDA of $24.5 billion in the year to June 30, up 10 percent, driven by record production in oil and iron ore. At the end of the financial year, gearing stood at just 6 percent.

Still, BHP has yet to make a compelling strategic case for buying Potash. The miner is already sufficiently diversified by customer, commodity and geography to have delivered its sixth consecutive year of 40 percent plus operating margins despite the global financial crisis. The offer for Potash, if successful, would deprive BHP investors of a significant potential cash return.

from Breakingviews:

Potash price crucial to how far BHP can stretch

Potash prices are crucial to how far BHP Billiton can stretch its $39 billion hostile bid for Canada's Potash Corporation of Saskatchewan. The miner's offer is essentially a bet on demand for the commodity, which accounts for the bulk of the fertiliser giant's value.

According to calculations by Reuters Breakingviews, every $50 increase in the long-term price of a tonne of potash adds about $20 to Potash Corp's value. BHP's offer reflects the current market. But if prices rocket, so too will the value of its target.

To value Potash Corp, start by looking at its other businesses. The company's phosphate and nitrogen divisions are worth roughly $11 billion, according to Morgan Stanley's estimates of what it would cost to rebuild them. Potash Corp also owns stakes in smaller listed rivals which have a current market value of $8 billion.

from Commentaries:

Green shoots or just talk in fertiliser M&A

CHINA/There are signs of life returning to M&A in the potash sector -- with market speculation that Potash Corp of Saskatchewan may bid for Germany's K+S.

Canada's Potash Corp -- the world's largest producer of the key ingredient in synthetic crop fertiliser -- said last month that North American potash inventories had fallen in July, an indication that sales of potash had begun to move again after a seizing up of the market.

Some analysts reckon that the market is now reaching a bottom and that there will be a sharp rebound in 2010 as farmers start buying again.