Saskatchewan poised to reject bid for Potash Corp
Canada's Saskatchewan province is set to recommend on Thursday that Ottawa block mining giant BHP Billiton's 40 billion US dollar hostile bid for Potash Corp, it hinted in an email.
Saskatchewan said it would lose three billion dollars in royalty payments over 10 years from the mining of the world's largest potash deposit, used to make fertilizer, if ownership of Potash Corp passed to BHP.
"BHP offered a 370 million dollar one-time payment into an infrastructure fund. This doesn't even come close to offsetting the province's revenue loss," the Saskatchewan government said.
This revenue loss to the province, it added, is "at the heart of any 'net benefit' calculation" that Ottawa must consider before approving BHP's takeover bid.
Compensation for this lost revenue, which BHP has reportedly snubbed, "would need to happen before we would even consider supporting the deal," said the statement.
"The position of the government of Saskatchewan is unchanged. The potash resource doesn't belong to any company. It belongs to the people of Saskatchewan. We will protect the economic and strategic interests of the people of Saskatchewan."
Saskatchewan Premier Brad Wall is to formally announce his government's recommendation to Ottawa at a business luncheon on Thursday. While Saskatchewan cannot stop the takeover of Potash Corp, it can influence a federal decision on the matter.
Investment Canada must conclude that the deal provides a "net benefit" to Canada in order to approve it. Its decision is expected next month.
Canada has only once rejected a foreign takeover of a Canadian company, in 2008 saying no to US-based Alliant Techsystems' purchase of satellite and space robotics firm MacDonald, Dettwiler and Associates Ltd (MDA).
© 2010 AFP