BHP Billiton abandons bid for fertiliser-maker Potash

15th November 2010, Comments 0 comments

Mining giant BHP Billiton Monday cancelled its multi-billion dollar takeover bid for fertiliser-maker Potash Corp after it was rejected by Canada, and announced a 4.2 billion US dollar share buy-back.

The world's biggest miner said promises to boost jobs and investment could not convince Canada's industry minister of the hostile bid's benefits despite being "unparalleled in substance, scope and duration".

"BHP Billiton continues to believe its offer would have resulted in a significant net benefit to Canada, Saskatchewan and New Brunswick," the company said in a statement.

"As a package, the proposed undertakings offered by BHP Billiton in a signed, written submission to the Minister of Industry were unparalleled in substance, scope and duration, reflecting the importance of potash to Canada and Saskatchewan."

BHP was given 30 days to adjust its offer on November 3, when Industry Minister Tony Clement rebuffed the deal on the grounds it was unlikely to benefit the country.

The Anglo-Australian company 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."

"Unfortunately, despite having received all required anti-trust clearances for the offer, we have not been able to obtain clearance under the Investment Canada Act and have accordingly decided to withdraw the offer," chief executive Marius Kloppers said.

Saskatchewan Premier Brad Wall had 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".

Russian agricultural firm Phosagro confirmed it was interested in Potash Corp after BHP's rejection. The importance of potash fertiliser has soared in recent years owing to mounting demand for food.

BHP also said it planned to reactivate a suspended 13 billion US dollar buy-back scheme aimed at re-purchasing 4.2 billion US dollars in shares from shareholders.

"The decision to reactivate the buy-back program is entirely consistent with our commitment to maintain an appropriate capital structure while we continue to make substantial investments in our growth projects," said company chairman Jac Nasser.

© 2010 AFP

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