Potash & Ag Merger Offer Changes Sector Valuation Models (POT, BHP, MON, MOS, AGU, CF, IPI, MOO)

Agriculture and potash investors had one small deal to consider yesterday, but today investors have the mother load to consider.  Potash Corp. of Saskatchewan (NYSE: POT) has rejected an unsolicited $130 per share acquisition from BHP Billiton plc (NYSE: BHP).

To make matters even more interesting, Potash Corp. also went defensive by adopting a shareholder rights plan that has a 20% trigger.  The company claims that the terms of the merger grossly undervalue the company.

Potash shares are trading significantly higher this morning.  Versus a $112.15 close on Monday and versus a 52-week trading range of $83.75 to $128.42, shares are trading up as high as $142.00 on over 400,000 shares with some two hours until the open.

If the price of this offer is not a game changing event for the agriculture, potash, and fertilizer sector, then nothing else is.

Monsanto Corp. (NYSE: MON) closed at $57.70 and shares are trading up over $60.00 pre-market versus a 52-week range of $44.61 to $87.06.

Mosaic Co. (NYSE: MOS) closed at $51.13 and shares are trading up over $56.00 pre-market versus a 52-week range of $37.68 to $68.28.

Agrium Inc. (NYSE: AGU) closed at $65.87 and shares are trading up over $70.00 pre-market versus a 52-week range of $45.16 – 73.85

CF Industries Holdings, Inc. (NYSE: CF) closed at $84.59 and shares are trading up over $90.00 pre-market versus a 52-week range of $57.56 to $110.00.

Intrepid Potash, Inc. (NYSE: IPI) closed at $23.96 and shares are trading up over $26.00 pre-market versus a 52-week range of $19.08 to $34.20.

Market Vectors Agribusiness ETF (NYSE: MOO) is on the move as well.  The ETF closed at $42.39 and are indicated for trading around $45.50 versus a 52-week range of $35.56 to $47.90.

Potash players may have a mixed business outlook on their own.  With this valuing Potash Corp. at north of $38 billion, valuation models for the sector just changed.

JON C. OGG