Potash Takes Steps to Improve Its Leverage

The Potash Corporation recently received an unsolicited $38.6 billion offer from BHP Billiton.  When made, BHP's bid was 16% higher than Potash's market capitalization.  The Potash board rejected the bid and announced it was seeking additional bids.  Potash's CEO, William Doyle, confirmed his company had started discussions with other potential suitors prior to BHP's bid.

Potash's stock price then soared, increasing its market capitalization significantly above BHP's initial offer.  Stock traders clearly expect BHP to raise its bid and/or for other potential suitors to enter the ring.

What simple lesson can we learn from this?  That taking concrete steps to create more alternatives and turn them into practical possibilities will strengthen your leverage and improve your results.