Canada rejects BHP Billiton's takeover of Potash Corp
Canada's industry minister on Wednesday rejected BHP Billiton's hostile takeover of the world's largest fertilizer maker Potash Corp, saying it is unlikely to benefit the country.
In reviewing the Anglo-Australian miner's bid, Industry Minister Tony Clement said it did not show a "net benefit" to Canada, as required under foreign investment laws.
"Our natural resources are important economic drivers," he said. "We must be careful stewards of those assets."
Clement stressed that "Canada is and must continue to be a trading nation with a free market" where foreign investment is welcome, but noted the potash industry's "intrinsic value" to Canada.
BHP now has 30 days to sweeten its offer before a final decision is made.
The top miner said it was "disappointed" by the decision and will "review its options."
Canadian Prime Minister Stephen Harper earlier defended his government's review, 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 launched in the 1970s by the Saskatchewan government but was privatized in 1991. Fifty-one percent of the company is now foreign-owned.
BHP launched a hostile all-cash takeover bid for Potash Corp in August, valuing it at 38.6 billion US dollars, an offer the Canadian firm immediately rejected as "wholly inadequate."
Saskatchewan Premier Brad Wall estimated the province could lose three billion dollars in royalties over 10 years from Potash Corp under BHP's control.
The premier said the takeover would put thousands of jobs and six billion dollars of capital expansion at risk, while losing Canadian control of what federal opposition MPs described as a "strategic natural resource."
Wall praised Clement's decision and dismissed concerns it may discourage foreign investment in Canada.
"This is different because of the strategic nature of the resource... in a world that's increasingly short on arable acres and getting hungrier and hungrier," he said.
Potash Corp is the world's largest producer of potassium chloride, a pink-hued mineral that is refined into agricultural fertilizer, with six deep underground mines in Saskatchewan and another in New Brunswick.
Potash has gained an increasingly important status in recent years amid mounting global food demand and rapidly-expanding China's role as a major importer of the product.
Fifty-three percent of the nutrient is found in Saskatchewan.
Potash Corp continues to try to block the takeover by suing BHP in the United States for allegedly misleading investors in an attempt to drive down its share price.
It urged shareholders to reject BHP's offer of 130 dollars per share, saying it is "not in the best interests of the company, its shareholders or other stakeholders."
A Chinese-led consortium had considered mounting a rival offer for Potash Corp but eventually backed off.
Russian agriculture firm PhosAgro and a Canadian aboriginal group are reportedly now eyeing the Saskatchewan-based company.
© 2010 AFP