Potash Corporation of Saskatchewan Inc (NYSE: POT)
Potash Corporation of Saskatchewan is having an incredible day in the market today, and for good reason. The company was featured in a Bloomberg report with some exciting news. According to sources, the company is planning on merging with Agrium (AGU). Today, we’ll talk about the merger plans, how the market reacted to the news, and what we can expect to see from POT stock moving forward.
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Pot Soars On Merger Rumor
As mentioned above, Potash is having an incredible day in the market today after a report was published saying that the company was planning on a merger. We know that few things get investors more excited than mergers and acquisitions. So, this was huge news.
According to the sources, POT will be merging with AGU. Perhaps more importantly, the sources added that a deal may be announced as soon as next week. However, no final decisions have been made so there’s still time for either company to call off the move.
How Likely Is The Merger
When these types of stories break, they are often deemed false right away. However, this is a very unique case. Instead of simply starting a rumor, Bloomberg has actually reached out to both companies and received a response. In their response, the companies said that they are in talks, but there is no assurance of a deal quite yet. So, we know that there is a bit of validity to the rumor here. However, is a merger really likely?
In my opinion, the answer is yes. Fertilizer companies have been struggling recently. This is the result of slumping crop prices causing financial pressure all the way down the line. By joining these two industry leaders together, POT and AGU will likely create a whole that is greater than the sum of its parts. The company will likely have less overall expenses, a stronger sales force, and stronger products if they decide to join forces. So, I do believe that an acquisition could happen.
How The Stock Is Reacting To The News
As mentioned above, nothing seems to excite investors quite as much as news of mergers and acquisitions. This case is no different. On both sides of the equation, the stocks are gaining in a big way. Currently (12:36), Potash Corporation is trading at $17.71 per share after a gain of $1.66 per share (10.34%) thus far today. AUG is currently trading at $94.70 per share after a gain of $5.22 per share (5.83%) thus far today.
What We Can Expect To See From POT Moving Forward
Moving forward, I have a very mixed opinion of what we can expect to see from POT moving forward. All in all, everything depends on this merger. Before the leak of the information surrounding these talks, the stock was dealing with heavy downtrends. However, now the stock is climbing dramatically. If news that the merger talks ended without a deal breaks, this stock is likely to fall right back to where it was and continue its slow and steady downtrend. However, if a merger is announced, we could see massive gains. At the end of the day, it’s a toss up for me with one deciding factor.
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What Do You Think?
Where do you think POT is headed moving forward? Join the discussion at TalkTRENDZ!
[Image Courtesy of Wikimedia]