Potash's Doyle Needs A River Ace

Todd Shriber
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In late July, when discussing the change leadership at BP, I compared some of the more illustrious C-level jobs to being the coach or manager of a prestigious sports franchise. With the escalating drama surrounding who is and who is not interested in acquiring Potash Corp. of Saskatchewan, the world's largest fertilizer producer, I have come up with another sporting analogy: Comparing Potash CEO Bill Doyle to a riverboat gambler.

In mid-August, after BHP Billiton, the world's largest mining company, made its initial $39 billion offer for Potash, I correctly surmised that more drama was on the way. That piece can be viewed (HERE), but my prognostication that more bidders would emerge for Potash has proven wrong to this point. Using a Texas hold 'em analogy, there may have been more than two players at the table, but BHP (BHP) and Potash are now heads up.

In poker parlance, Doyle and Potash (POT) were dealt a pair of aces. After all, it is not everyday that adoring suitors come around waving almost $40 billion at you. For its part, BHP was dealt a pair of kings. The flop (the first three cards all players can use) has come out and there was no help to either company, but the turn card is now out and BHP is sitting on three kings, meaning that none of the other suitors analysts and investors thought would offer a rival bid for Potash have done so.

Rio Tinto (RTP) looked an ideal candidate to give BHP a run for its money with Potash, but Rio has done an admirable job of paring its debt load and shoring up its balance sheet in the past in the past year. Immediately following the BHP offer for Potash, Rio's CEO said his company is looking to make smaller deals in the coal space and does not have the appetite for a large scale purchase.

Making Doyle look all the more the part of a high-stakes gambler, the Wall Street Journal reported on Monday that Brazil's Vale (VALE), also thought to be a logical suitor for Potash, will bolster its fertilizer operations through the creation of a new company that will pursue $12 billion in acquisitions and new projects over the next three years. In other words, count Vale out, at least for now.

Now Doyle and Potash shareholders wait for the river ace to come. Doyle himself is ''all in'' to the tune of a $445 million payday he stands to reap if Potash is acquired. Perhaps in an effort to cajole that river ace out of the dealer, Doyle posted video footage to Potash's corporate Web site today saying that he believes BHP will not be the only bidder for his company.

China may prove to be Doyle's ace in the hole as press reports continue to pop up saying that Beijing has ordered Chinese firms to make a run at Potash. Assuming those reports are true, China is essentially admitting that it is fearful over the pricing pressure BHP could inflict if the Anglo-Australian mining firm is successful in its bid to get Potash.

Canada has warmed to Chinese investments recently as Chinese energy firms have taken stakes Canadian oil sands projects, but the folks in Ottawa seem reluctant to allow Potash to fall into foreign hands, making Doyle's $445 million bet look even more risky. Without the help of a crystal ball, I do not know what is going to happen next, but it does appear that BHP's three kings look pretty strong right now.