HONG KONG — The hostile takeover bid by Australia's BHP Billiton for Potash Corp. of Saskatchewan, Canada, is worthy of a case study by Harvard Business Review, but it is also a fascinating example of the adventures and misadventures, opportunities, and considerable failings of global capitalism at work, especially as they involve China Inc.
From early last year, there had been rumors that the Australian mining giant had Potash in its sights. So it should not have been a surprise — except perhaps in that it took so long — when BHP last month launched a $130 a share bid totaling $39 billion for the Canadian company. It was brilliantly opportunistic. BHP's offer was way above the languishing Potash shares, which hit a 52-week low of $88.68 in July, but soared toward $150 after the BHP offer.
BHP cleverly bid when potential rivals, notably Rio Tinto and Vale of Brazil, were preoccupied. World potash prices were at lows of $400 a ton in the second quarter, though they are expected to rise rapidly on fears of shortfalls in global food production. (This, incidentally, says little for so-called value investors: Shares of Potash were so low that investors had to wait for BHP to wake them up to the potential.)