Canada rejects BHP Billiton's takeover of Potash Corp
Canada Wednesday rejected BHP Billiton's hostile takeover of the world's largest fertilizer maker Potash Corp, saying it is not likely to be of "net benefit" to Canada.
"I have come to the conclusion that BHP Billiton's bid does not present a likely net benefit to Canada," Industry Minister Tony Clement said.
Under the Investment Canada Act the minister must conclude that deals valued at 300 million dollars or more provide a net benefit to Canada to approve them.
In this case, Clement said: "Our natural resources are important economic drivers... We must be careful stewards of those assets."
He stressed that "Canada is and must continue to be a trading nation with a free market" and that foreign investment is welcome, but added: "the federal government understands the intrinsic value of the potash industry to the country and to the people of Canada."
BHP now has 30 days to sweeten its offer before a final decision is made, Clement said.
The Anglo-Australian firm said it was was reviewing its options.
"BHP Billiton is disappointed, but continues to believe that the offer is of net benefit to Saskatchewan, New Brunswick and Canada," the Anglo-Australian company said in a statement released in Australia.
"BHP Billiton will continue to cooperate with the minister and the Investment Review Division of Industry Canada and will review its options."
Canadian Prime Minister Stephen Harper earlier defended his government's review of the bid, telling parliament to expect a "considered decision that is in the best interests of the Canadian economy."
His Conservative government had been under tremendous pressure from opposition MPs and Saskatchewan province to block the sale.
Potash Corp was started in the 1970s by the Saskatchewan government but was privatized in 1991. Fifty-one percent of the company is now foreign-owned.
BHP Billiton launched a hostile all-cash takeover bid for Potash Corp in August valuing it at 38.6 billion US dollars but this was immediately rejected as inadequate by the Canadian firm.
Saskatchewan Premier Brad Wall had hinted at a possible legal challenge if Clement approved BHP's bid, estimating the province could lose three billion dollars in royalties over 10 years under BHP's control.
The premier insisted the takeover bid fails Canada's "net benefit" test by putting thousands of jobs and six billion dollars of capital expansion at risk.
As well, he said it would mean losing Canadian control of what federal opposition MPs described as a "strategic natural resource."
Potash Corp is the world's largest producer of potassium chloride, a pink-hued mineral that is refined into a fertilizer for agriculture purposes, with six deep underground mines in Saskatchewan and one in New Brunswick.
The importance of potash has grown over the last years owing to mounting demand for food in the world and rapidly-expanding China is a major importer of the product.
Potash Corp continues to try to block the takeover by suing BHP in the United States for allegedly misleading investors in its bid in an attempt to drive down its share price.
A Chinese-led consortium had considered mounting a rival offer for Potash Corp but backed off.
According to reports, Russian agriculture firm Phosagro and a Canadian aboriginal group are now eyeing the Saskatchewan-based company.
© 2010 AFP