The Successful Investor Hotline – Friday, November 5, 2010

Article Excerpt

POTASH CORP. OF SASKATCHEWAN, $141.32, Toronto symbol POT, fell 4% this week after Ottawa said it would block the hostile takeover offer by BHP Billiton Ltd. (New York symbol BHP). However, under the Investment Canada Act, which governs foreign takeovers of Canadian companies, BHP now has 30 days to modify its bid so that the takeover is a “net benefit” for Canada. The stock is now trading at 8.7% above the $130.00 U.S.-a-share that BHP is offering. That indicates that investors expect a higher offer from either BHP or another bidder. BHP still has room to raise its bid. That’s because BHP’s shares also trade on the London Stock Exchange, and British law would require BHP to hold a special shareholders’ vote if the value of a takeover offer is more than 25% of BHP’s market cap. At the time of the original announcement on August 17, 2010, the bid represented 21% of BHP’s market cap. Right now, the offer is equal…