$40 Billion Worth Of POT Goes Up In Smoke As Merger Arbs Face Un-Merger Monday Massacre
Not a good way to end the weekend for hundreds of merger arbs, who had been betting that the BHP-Potash deal would close one way or another. Bloomberg reports, just before 4:20pm central time that, "BHP Billiton Ltd., the world’s largest mining company, abandoned its $40 billion cash offer for Potash Corp. of Saskatchewan Inc. after Canada rejected the proposal. BHP reactivated its buy-back program." Still, POT will be $350MM richer, courtesy of the break up fee, but it will be small cold comfort as the stock's fate at current elevated levels now depends almost exclusively on a Chinese white (k)night emerging.
Among the major casualties which will be bleeding red ink tomorrow, are the following hedge funds which have established a sizable arb stake in POT (sorted in order of size), after holding nothing prior to the most recent quarter:
- Taconic: 4.55 MM shares as of Sept 30;
- Duquesne Capital: 2.2MM shares as of Sept 30 (then again Duquesne is already history)
- Perry Capital: 1.6MM shares as of Sept 30;
- Franklin Resources: 1.6MM shares as of Sept 30;
- Highstreet Asset Management: 1.2MM shares as of Sept 30;
- Gruss Asset Management: 1MM shares as of Sept 30;
- First Eagle: 0.5MM shares as of Sept 30;
- Giovine Capital: 0.5MM shares as of Sept 30;
- Senator: 0.4MM shares as of Sept 30;
- Lazard Asset Management: 0.3MM shares as of Sept 30;
Oops. And here's to hoping there wasn't a corresponding short in BHP...
In other news, the biggest legal holders of POT in the world are the usual suspects:
- CapRe: 21MM
- BlackRock: 13.7MM
- Primecap: 10.6MM
- Jarislowsky, Fraser: 8.7MM
- Pyramis Global Advisors: 7.4MM
And for full comedic impact, here is Cramer's take: "Despite BHP Offer, Potash Is Still a Buy"
the very least,” Cramer said, “the stock deserves to go out at, yes,
$160 a share, well below its top in 2008 but well above the $143 price
tag where it went out today.”