BHP Billiton's (NYSE ADR: BHP) $38.56 billion bid for Potash Corp. of Saskatchewan Inc. (NYSE: POT) is just the latest episode in what's likely to be a continuing surge of merger-and-acquisition (M&A) activity in the agribusiness sector.
Canada-based Potash, the world's largest producer of potash, yesterday (Tuesday) rejected an unsolicited takeover bid from the Australia mining giant, calling the offer "grossly inadequate."
The fertilizer company also quickly adopted a so-called poison-pill defense to fend off would-be suitors, though it said it would be open to a transaction if the price were right.
Caterpillar Inc.
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BHP Billiton's Bid for Potash Could Spark Surge of M&A Activity in Agribusiness Sector
The Supply Chain Strain Is Changing the Way Manufacturers Do Business
As growing demand boosts production in the second half of 2010, some companies will fail to meet output due to struggles in the supply chain.
Earnings season has shown industrial companies' surging profits in the first half of the year and increased optimism for the months to come. Emerging market strength and stable raw material prices have helped the manufacturing boost.
Industry giants like Caterpillar Inc. (NYSE: CAT) and Siemens AG (NYSE ADR: SI) all raised their outlooks and posted higher-than-expected earnings.
Siemens' second-quarter orders increased by 22% from a year ago and income rose 40% to a record high of $3 billion (2.3 billion euros). The demand increase Siemens is predicting for the rest of 2010 allowed the company to end the reduced working-hour arrangements it had set up with about 19,000 employees.
Earnings season has shown industrial companies' surging profits in the first half of the year and increased optimism for the months to come. Emerging market strength and stable raw material prices have helped the manufacturing boost.
Industry giants like Caterpillar Inc. (NYSE: CAT) and Siemens AG (NYSE ADR: SI) all raised their outlooks and posted higher-than-expected earnings.
Siemens' second-quarter orders increased by 22% from a year ago and income rose 40% to a record high of $3 billion (2.3 billion euros). The demand increase Siemens is predicting for the rest of 2010 allowed the company to end the reduced working-hour arrangements it had set up with about 19,000 employees.
Buy, Sell or Hold: Cummins Inc. (NYSE: CMI) is a High-Powered Engine Maker That's Revving Up Its Revenue
Nestled in the heartland of America, Cummins Inc. (NYSE: CMI) is an icon of American manufacturing done right. And now that it's being powered by new technology, emerging markets growth and new regulatory standards, the company is ready to book serious profits.
Founded almost 100 years ago and publicly traded since 1957, Cummins dominates the diesel truck engine market in the United States and is strongly increasing its international presence.
The high quality, efficiency and durability of the engines Cummins designs and builds are the foundation of the company's leadership. And its strong and disciplined cost controls, inventory, and receivable management are vastly superior to that of its competition.
Founded almost 100 years ago and publicly traded since 1957, Cummins dominates the diesel truck engine market in the United States and is strongly increasing its international presence.
The high quality, efficiency and durability of the engines Cummins designs and builds are the foundation of the company's leadership. And its strong and disciplined cost controls, inventory, and receivable management are vastly superior to that of its competition.
Buy, Sell or Hold: Altria Group Inc. (NYSE: MO) – The 'Sin Stock' You Have to Own
With more than 1 billion smokers worldwide, it is hard to conceive that companies selling cigarettes would not be extremely profitable. In addition, the majority of people who are smokers also tend to be alcohol consumers. One company that services both of these vices is Altria Group Inc. (NYSE: MO).
Altria Group is a holding company; its wholly owned subsidiaries consist of Phillip Morris USA Inc., U.S. Smokeless Tobacco Co. (prior to 2001 it was known as United States Tobacco Inc.), John Middleton Co. and Phillip Morris Capital Corp.
On Jan. 6 2009, Altria Group purchased UST Inc. in a $10 billion deal that gave the maker of Marlboro cigarettes an entrée into the "smokeless tobacco" market, thanks to UST's ownership of the Skoal and Copenhagen brands.
Altria Group is a holding company; its wholly owned subsidiaries consist of Phillip Morris USA Inc., U.S. Smokeless Tobacco Co. (prior to 2001 it was known as United States Tobacco Inc.), John Middleton Co. and Phillip Morris Capital Corp.
On Jan. 6 2009, Altria Group purchased UST Inc. in a $10 billion deal that gave the maker of Marlboro cigarettes an entrée into the "smokeless tobacco" market, thanks to UST's ownership of the Skoal and Copenhagen brands.
European Debt Crisis Raises Caution Flags But U.S. Economy Won't Be Derailed
Stocks somersaulted into the red early last week in the wake of European debt downgrades, rising revulsion over the prospect of a bailout of Athens and a broad re-pricing of risk. Breadth was negative, the number of new highs shrank and number of new lows swelled. Financials tumbled and retailers stumbled. Caution flags are rising.
Click Here to Read More on how European Debt Will Affect the Markets
Pacifying the Panda: U.S. Companies Must Take a New Approach to China
There's no question about what kind of profit opportunities the Chinese market offers. Moreover, the willingness of U.S. companies to partner with China in the pursuit of profit is equally blatant.
So why is it that more U.S. businesses feel less welcome in China now than they did four years ago?
The fact is that in the past four years, China's economy has continued to grow by leaps and bounds, while a humiliating financial collapse and soaring debt have tarnished much of the shine that once adorned the U.S. market.
Indeed, for the first time in perhaps more than a century China has the upper hand. How long that will last is a difficult question to answer, but right now, China wants to use its leverage to support domestic companies - and it's doing so unapologetically.
So why is it that more U.S. businesses feel less welcome in China now than they did four years ago?
The fact is that in the past four years, China's economy has continued to grow by leaps and bounds, while a humiliating financial collapse and soaring debt have tarnished much of the shine that once adorned the U.S. market.
Indeed, for the first time in perhaps more than a century China has the upper hand. How long that will last is a difficult question to answer, but right now, China wants to use its leverage to support domestic companies - and it's doing so unapologetically.
Healthcare Reform Losers: Companies Providing Retiree Benefits Face Multi-Million Dollar Tax Costs
After sending letters of protest to Congress in the months prior to the healthcare law's approval, U.S. companies are now facing multi-million dollar after-tax hits this year due to a tax provision in the new legislation, labeling them healthcare reform losers instead of winners.
Part of the new healthcare law places a federal income tax on government subsidies given to companies that provide retirees and their spouses with drug benefit plans. The 28% subsidy was created as Medicare Part D, adding a prescription plan for senior citizens to the Medicare Act of 2003. To encourage companies to continue offering retirees a drug plan, the tax-free subsidy reduced companies' costs. Fewer senior citizens then went through Medicare's prescription program - which would have cost taxpayers much more than the subsidy price.
Caterpillar Inc (NYSE: CAT) and Deere & Company (NSYE: DE) are just two of the businesses that fought the new stipulations. The manufacturers estimate the tax will cost them $100 million and $150 million this year, respectively. Other companies who will pay handsomely include AK Steel Corp. (NYSE: AKS) with $31 million in charges, and Honeywell International Inc. (NYSE: HON) with an estimated fee of $42 million.
Consulting firm Towers Watson & Co. (NYSE: TW) estimates these taxes could cost companies about $233 per person receiving drug benefits - a hefty price tag when a company gives benefits to 40,000 retirees, like Caterpillar.
Overall, more than 3,500 companies offer drug benefits to 6.3 million retirees. Although the tax won't be effective until 2011, accounting practices force companies to recognize the fees in the period in which the law is signed. That means the tax could nab $14 billion from corporate profits in a year when companies were hoping to recover from huge losses during the recession.
Part of the new healthcare law places a federal income tax on government subsidies given to companies that provide retirees and their spouses with drug benefit plans. The 28% subsidy was created as Medicare Part D, adding a prescription plan for senior citizens to the Medicare Act of 2003. To encourage companies to continue offering retirees a drug plan, the tax-free subsidy reduced companies' costs. Fewer senior citizens then went through Medicare's prescription program - which would have cost taxpayers much more than the subsidy price.
Caterpillar Inc (NYSE: CAT) and Deere & Company (NSYE: DE) are just two of the businesses that fought the new stipulations. The manufacturers estimate the tax will cost them $100 million and $150 million this year, respectively. Other companies who will pay handsomely include AK Steel Corp. (NYSE: AKS) with $31 million in charges, and Honeywell International Inc. (NYSE: HON) with an estimated fee of $42 million.
Consulting firm Towers Watson & Co. (NYSE: TW) estimates these taxes could cost companies about $233 per person receiving drug benefits - a hefty price tag when a company gives benefits to 40,000 retirees, like Caterpillar.
Overall, more than 3,500 companies offer drug benefits to 6.3 million retirees. Although the tax won't be effective until 2011, accounting practices force companies to recognize the fees in the period in which the law is signed. That means the tax could nab $14 billion from corporate profits in a year when companies were hoping to recover from huge losses during the recession.
The Year of the Tiger is the Perfect Time for Caterpillar Inc.
In China, the tiger is commonly thought of as lazy, merely appearing to be strong and ferocious.
But that's truly not the case. The tiger does not waste his energy showing his strength. Instead, it sees the future and knows precisely when to pounce on its prey. Those who can see past the great wall of today and look into the future - much like our wise friend, the tiger - understand just what it takes to be successful.
If we were to analyze the growth potential for the worldwide construction industry, we would find that Japan's Komatsu Ltd. (OTC ADR: KMTUY) and the U.S.-based Caterpillar Inc. (NYSE: CAT) are best-positioned for global success.
But that's truly not the case. The tiger does not waste his energy showing his strength. Instead, it sees the future and knows precisely when to pounce on its prey. Those who can see past the great wall of today and look into the future - much like our wise friend, the tiger - understand just what it takes to be successful.
If we were to analyze the growth potential for the worldwide construction industry, we would find that Japan's Komatsu Ltd. (OTC ADR: KMTUY) and the U.S.-based Caterpillar Inc. (NYSE: CAT) are best-positioned for global success.
Four Ways to Profit From a Business-Driven Rebound
Last week we learned that the U.S. economy expanded by a whopping 5.7% annual rate in the 2009 fourth quarter - the biggest jump since 2003. This was well ahead of the 4.5% consensus estimate and solidly beats the 2.2% growth rate achieved in last year's third quarter. The turnaround is the largest in almost three decades.
The main driver of the performance was a big slowdown in the rate at which businesses were drawing down their inventories. This alone contributed 3.4% to overall growth in the quarter. Paul Ashworth at Capital Economics in London believes that inventory rebuilding will continue to boost gross-domestic-product (GDP) growth for another two or three quarters.
But what happens after that - especially after the stimulus spending out of Washington winds down later this year? Will this rate of growth continue?
Investors who know the answer to that question will be the best-positioned to profit.
The main driver of the performance was a big slowdown in the rate at which businesses were drawing down their inventories. This alone contributed 3.4% to overall growth in the quarter. Paul Ashworth at Capital Economics in London believes that inventory rebuilding will continue to boost gross-domestic-product (GDP) growth for another two or three quarters.
But what happens after that - especially after the stimulus spending out of Washington winds down later this year? Will this rate of growth continue?
Investors who know the answer to that question will be the best-positioned to profit.
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