Agriculture

Little downside from bulking up Glencore syndicate

4 Mar 2011

The commodities giant may hire more banks to prepare its mooted $60 bln IPO. Doing so allows Glencore to pressure fees, reach more investors and quash negative research. The banks get league table credit and a cut of some $240 mln in fees. The only potential losers are investors.

Glencore story is striking but not yet compelling

3 Mar 2011

The Swiss commodities trader, currently pondering an IPO, says quarterly operating profit is near its 2007 peak. But the impressive financial performance isn't in itself a guarantee that Glencore will achieve its mooted $60 billion equity valuation.

Cargill gives BHP a second shot at potash

18 Jan 2011

The biggest private U.S. firm is spinning off its majority stake in $37 bln phosphate and potash producer Mosaic. The complex deal will create three share classes and take a while but should still invite suitors in time. And Minnesota may be more welcoming than Saskatchewan.

Protectionism remains a threat – not a reality

4 Nov 2010

Canada's rejection of the Potash bid is wrong, but not a sign of rising protectionism. Actual barriers to trade of investments haven't multiplied since the beginning of the slump. Governments have wised up to the lessons of the past, and economic populism doesn't pay.

BHP should go where it’s wanted: under the sea

4 Nov 2010

Canada's objections to the miner's $39 bln bid for Potash Corp look hard to overcome. BHP investors won't care much, as the logic for the offer was never very powerful. The group can now use the cash on higherreturn projects, where size isn't a hindrance like deepsea oil.

Blocking BHP’s Potash bid could damage Canada

1 Nov 2010

The government will decide this week whether to allow the $39 bln deal. A BHP takeover may squeeze the tax that Potash Corp pays its home province. But those costs are outweighed by the discount that Canadian companies would suffer if the country was viewed as protectionist.

Potash Corp results turn the screw on BHP

28 Oct 2010

The fertiliser group's strong Q3 numbers and bullish outlook add to the pressure on the miner to lift its $39 billion hostile bid or walk away. However, neither side has reason to show its hand until the Canadian authorities decide whether to allow the deal to go ahead.

Not much common ground in BHP’s Potash bid

27 Oct 2010

The miner's $130ashare offer for the fertiliser group offers slim returns. But Potash Corp is probably worth around $148 even without a bid. Unless BHP finds some synergies, or persuades shareholders of its bullish longterm view, its chances of success look small.

Corn chaos casts cloud over commodities trading

14 Oct 2010

Violent swings in corn prices following recent contradictory statistics have exposed flaws in the way commodity markets work. The latest surge threatens a food crisis for the poor even though the global harvest is the thirdhighest ever. The market is not working for endusers.

Louis Dreyfus merger looks odd for Olam

24 Sep 2010

A deal could be worth $15 bln and would create the world's third largest agricultural commodities trader. Big may be better in trading, and the tieup could advance the French group's strategic ambitions. But a combo may dilute the attractions of nimble Singaporeanbased Olam.

Moscow mayor’s troubles catch out an oligarch

23 Sep 2010

The Kremlin's battle to oust Moscow's influential mayor Yuri Luzhkov has caught an oligarch, potashandgold king Suleiman Kerimov, in the crossfire. Kerimov can probably weather the storm. But the freezing of his assets in Cyprus is a timely reminder of Russia's political risk.

Potash lawsuit defence risks looking desperate

22 Sep 2010

The Canadian group has asked a U.S. court to halt BHP's hostile $39 bln bid. The move may delay the AngloAustralian miner's advance and force it to come clean about its plans. But the flimsy case could undermine Potash Corp's claims to be maximising value for its shareholders.

Waiting game may favour BHP in Potash Corp battle

21 Sep 2010

The longer regulators take to approve the miner's $38.6 bln offer, the more time there is for rival suitors to emerge. But any white knight hoping to rescue the Canadian group will face similar scrutiny. BHP's onemonth head start could prove to be a tactical advantage.

Potash MBO looks a bit desperate

16 Sep 2010

Assembling a partly Chinesefinanced management buyout to trump BHP's $38.6 bln offer will be tricky. China's strategic interests conflict with those of financial buyers and a bid would face intense regulatory scrutiny. An MBO is a poor alternative to a real white knight.

China needs right ingredients for Potash bid

9 Sep 2010

A Chinese counter to BHP Billiton's $39 bln bid for the Canadian fertiliser maker depends on getting the right ingredients. Singapore's Temasek may be able to help with some of them, if it can get a sweet deal. Meanwhile, China's scarcest asset may be time.

Russian potash not a one-way bet

8 Sep 2010

Rio Tinto may be mulling an investment in the Russian potash group Uralkali. With 22 percent of world potash reserves and proximity to key markets, Russia is well positioned to tap rising fertiliser demand. But the changing global market structure poses risks.

BHP’s Kloppers can afford Potash Corp failure

6 Sep 2010

The miner's CEO has put his reputation on the line by launching one of the industry's biggest takeovers in a decade. His two previous M&A attempts haven't come to much. But aborted tieups are common in the sector. Kloppers could survive a failed deal more easily than overpaying.

Export ban ruins Russia’s agricultural dream

3 Sep 2010

Just a couple of years ago, the Kremlin boasted of Russia's ambitions to feed the world. Investors poured into Russian agriculture to tap its huge export potential. But economic slump, drought and now a prolonged grain export ban show how far the dream is from becoming reality.

Sinochem could struggle to frustrate Potash bid

2 Sep 2010

Intervening in the battle for control of the Canadian fertiliser group would fit with the stateowned firm's aim to be a mainstay for China's agricultural safety. Financing won't be a barrier. But Sinochem will face other hurdles if it wants to block BHP Billiton's $39 bln bid.

Potash bull case rests on doubtful economics

31 Aug 2010

The more China eats, the more fertiliser it needs, say bulls. Presto, higher prices for producers. Yet Beijing can reap productivity gains that don't use more potash. Moreover, food selfsufficiency is a choice which China may one day decide it is better off without.