A Steal at $39 Billion
link Potash Corp. CEO: Takeover bid, at $39B US, ‘grossly inadequate’.
Really? Are you kidding me? I suppose you have to at least play the part of insulted manager if only to pursue a higher bid for the company for which you were unable to realize proper shareholder value. In his private moments though, he must be doing somersaults like a Russian gymnast. Why? Because from some accounts, CEO Bill Doyle will make over $445 million dollars from stock options if the takeover bid for Potash Corporation succeeds.
If the takeover bid from BHP Billiton is grossly undervalued, what does that say about the affairs of Potash Corp under the stewardship of the present management? If you ran a lemonade stand for a group of people and then all of a sudden someone wants to pay a huge premium over estimated value to buy it and also to pay you a personal windfall, you’d take the money and there would be a vapour trail to your new villa in France.
If Mr. Doyle thinks the offer is grossly undervalued, why isn’t the market price reflective of his perception before the takeover bid? Investing is all about perception. There’s the old saying that a market is a place where there is an agreement on price but a disagreement on value. In this case, BHP sees something the present Potash shareholders do not. Someone’s right, that’s the game.