Agriculture

China may not be fertile for Potash white knight

24 Aug 2010

The Canadian fertiliser maker may hope for a Chinese suitor to top BHP Billiton's $39 bln bid. China depends on potash and may even enjoy seeing BHP fail. But there are obstacles. Bureaucracy and hostile bids don't mix, and the ghost of Chinalco's raid on Rio Tinto lingers.

BHP’s Kloppers learns from past failures

20 Aug 2010

The mining chief's last big attempted deal with Rio Tinto fell flat. That raises the stakes for his $39 bln bid for Potash Corp. BHP's latest target involves less regulatory risk and should not offend customers as much. Yet the hostile tone suggests familiar tactics.

Potash defense may include Chinese wildcard

18 Aug 2010

The Canadian fertilizer group is willing to sell but only at a price well above BHP's $39 bln offer. Getting an auction going is its best bet. Obvious players are hamstrung and short of time, but there are other options and the company s allure could draw out surprise bidders.

BHP’s diversification case is far from compelling

18 Aug 2010

The miner has the financial firepower to raise its $39 billion bid for Potash Corp. It may also make some improvements to the world s largest fertiliser group. But the deal won t substantially alter the shape of BHP s business just make it look more like a commodities index.

Russian potash not a fertile ground for foreigners

17 Aug 2010

Suleiman Kerimov seems intent on merging Uralkali and Silvinit, the two potash companies that the Russian billionaire now controls. The combination makes industrial sense. But minority investors risk losing out from Kerimov's manoeuvres.

BHP puts itself in focus with $39 bln Potash bid

17 Aug 2010

The mining giant's measly allcash offer for the world s largest fertiliser group was firmly rebuffed. Though the commodity is hot, Potash Corp s size makes a bidding war unlikely. Even so, BHP needs to prove a deal is a better use of its cash than returning it to shareholders.

Potash dynamics suggest more upheaval to come

17 Aug 2010

BHP s huge $39 bln offer for Potash Corp highlights a trend. Demand for potash fell off a cliff in 2009. But it will more than recover as growing prosperity leads people to eat more foods that need fertilizer. High barriers to entry favor acquisitions over digging new mines.

Fertilizer deal victory looks Pyrrhic

12 Mar 2010

A truce has been reached in the manure wars. After a yearlong battle, CF Industries is buying rival Terra for $4.7 bln; Yara and Agrium are in retreat. But CF looks stuck with the winner s curse, as the fourway fight drove prices way up. The losers come up smelling of roses.

Doubling U.S. exports will take more than rhetoric

11 Mar 2010

President Obama s goal of doubling exports in five years requires market opening, not just subsidies and new bureaucracies. If he yields to protectionism on trade, agriculture and antidumping matters, global trade will decline most likely taking U.S. exports down with it.

China needs fertilizer more than steel

27 Jan 2010

If the Middle Kingdom's industrialization follows the course of other nations, per capita demand for infrastructure like concrete and steel will peak long before meat consumption. This may explain why M&A in agriculture, not steel, is so hot. Case in point: Vale's $3.8 bln deal.

Manure ménage à trois is gift that keeps on giving

19 Nov 2009

It s hard for investors or the media to do more than turn their noses up at the threeway scrum between North American fertilizer groups. But the $9bnworth of bids has helped Wall Street banks, lawyers and PR firms keep the lights on. Its passing will leave a fee void.

British Land shares price in too much hope

17 Aug 2009

The UK commercial property group is flying high on speculation of a bid or a partial sale of its prized London office complex to US buyout firm Blackstone. Its Q1 results may mark the trough. But corporate activity is no certainty and the shares look overpriced.

Thales coup tramples governance standards

15 May 2009

Planemaker Dassault bought 26% of the defence electronics group, but promised it wouldn t try to manage the larger company. Now it has teamed up with the French government to do just that, by unseating its CEO. That s bad for minority shareholders and for Thales business.

All-stock deals make unwelcome return

23 Jun 2008

Companies with overpriced stocks are often tempted to use it to buy cheaper competitors. Take Bunge s $4.4bn purchase of US agriculture group Corn Products. The deal looks slightly value destructive. So why do it? Well, Bunge s stock is up 50% over the past year.

Biofuels aren’t the main cause of food inflation

4 Jun 2008

Schemes like the US cornbased ethanol programme are a convenient scapegoat for higher world food prices. However, protectionism in both rich and poor countries and excessive global money creation are more important factors.

US farm bill: 1930s socialism without the justification

20 May 2008

The farm bill expands US agriculture subsidies, born in an impoverished world where markets seemed to have failed. The new bill will subsidise the wealthy, provide cash supports even at high prices, damage world trade talks and boost inefficient domestic sugar and cotton cartels.

Subsidies and quotas make food problems worse, not better

28 Apr 2008

France s farm minister wants programmes like the EU s agricultural policy in Asia and Latin America. That won t help the world food shortage. Subsidies and so on depress food production in poor countries and cause waste. Freer trade and global buffer stocks are better answers.

Cloning set to become an investment opportunity

22 Apr 2008

Cloning seven sniffer dogs for Korea's Customs Service cost only $300,000. That's near commercial viability for animals with special characteristics, as well as millionaires' pets. Cloning could soon become a lucrative business.

WTO is emerging markets’ best bet

16 Oct 2007

The World Trade Organization s judgment against the US on cotton subsidies removes a barrier to developing countries growth. The WTO is their only viable weapon against US, EU and Japanese protectionism. As such, it s far more useful to developing countries than the World Bank.

Too much money chases too little wheat

27 Aug 2007

Record wheat prices and a 27year inventory low reflect rapid world growth and loose money. Emerging market consumers want to eat too. Rising commodity prices are a key component of worldwide inflation. Ignoring them in price indices is delusory.