Shares of Potash Sink As Sinochem Abandons Bid

Shares of Potash Corp. of Saskatchewan (POT) are down sharply today, following a Globe and Mail [G&A] report that Sinochem Group, the giant Chinese state-run chemicals conglomerate, has dropped its plan to bid for the company. Sinochem was POT’s best hope to rival BHP Billiton‘s (BHP) $39 billion hostile takeover offer for the Canadian fertilizer giant.

The G&A said that according to an investment banking source close to the takeover effort, Sinochem had retreated five or six weeks ago. “We’ve known for a few weeks they were gone, though there certainly was a degree of interest from the company, ” the source said. It’s worth noting that these remarks are a bit odd in the sense that they do correspond with about the same number of weeks during which Sinochem reportedly hired Citigroup (C) and Deutsche Bank (DB) to advise it on the matter.

The G&A source also said the Chinese government withdrew political support for a Sinochem investment in Potash because they “were attuned to the political risks and don’t like to get involved in hostile situations”.

Shares of Potash Corp., a co. that has flatly rejected BHP’s $130 per share offer and has repeatedly stated it expects other offers, remain under pressure in midday trading, currently printing the tape down $2.17, or (1.47%), to $145.00.

POT soared to an all-time high of $159.23 on August 23, 2010. However, this technical feat is nothing new to Potash, which has been creating a series of HH since mid August. Throughout this time, POT has relied on solid support from its 200-day MA trendline, located at $115.36, approximately 25.6% below ticker’s current pps.

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About Ron Haruni 1068 Articles
Ron Haruni is the Co-Founder & Editor in Chief of Wall Street Pit.

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