Wednesday, October 20, 2010

Is Potash deal doomed?

BHP bid for POT is facing provincial government's opposition and the final federal government's decision is on Nov. 4. The concern is a 10 year tax revenue loss of 3 billion dollar for the provincial government. I do not believe that 3 billion dollars will be a big obstacle for BHP, considering the deal size (around 45 billion at the end). The most important issue is still the takeout price. I do think that BHP does not want to go beyond $155. If POT is not satisfied with that price then the deal may fail.

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