Investors are talking about whether Potash Corp. of Saskatchewan (NYSE:POT) will start to monetize its strategic investments, with an ultimate goal of returning the cash to shareholders.
Potash Corp. owns a 32% stake in Chilean specialty fertilizer and industrial chemicals producer Soquimich Comercial SA, 28% of Jordan-based miner Arab Potash Co., 22% of Chinese agricultural giant Sinofert Holdings Ltd. and 14% of Israel Chemicals Ltd.
Together, these investments are worth about $33 a share (pre-split), according to Scotia Capital analyst Ben Issaacson.
In a note to clients, he explained that BHP Billiton’s (NYSE:BHP) $130 a share hostile takeover bid for Potash brought the fertilizer giant’s four strategic stakes into the spotlight.
Cargill Inc.’s decision to start selling its 64% stake in Mosaic Co. (NYSE:MOS) has also prompted investor interest in monetization for Potash Corp., as have fertilizer equity valuations that Mr. Issaacson believes look “somewhat rich,” suggesting the cycle peak is approaching.
However, the analyst thinks Potash Corp. is more of a buyer than a seller. His discussions with the company this week show that it is is maintaining its investment positions due to the fertilizer-related market intelligence provided, their potash-first strategies, and the low-cost positions of some of these stakes.
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