Potash Corp. Of Saskatchewan Announces $2 Billion Share Buyback

Potash Corp. POT announced today that its Board of Directors has approved a new one-year share repurchase program, effective November 18, 2010, for up to $2B of the company's common stock. The announcement is a welcome move following the withdrawal of the BHP acquisition offer earlier this week. We think that the announcement will be viewed positively by investors. Since the BHP-POT announcement in August, POT's shares have underperformed the peer group as uncertainty regarding the bid has overshadowed improved fertilizer fundamentals. The $2B authorization equates to roughly 14.5mm shares, or ~5%, of the company's total outstanding diluted share count, and is similar in size to previous POT buyback programs. While POT has one year to complete this authorization, management intends to finish the repurchase by the end of this year. As the largest global potash producer, POT remains poised to benefit from improved Ag fundamentals due to higher crop prices, tight fertilizer supplies, and strengthening global demand. Citi maintains a Buy on POT. POT is trading higher at $135.88