BHP Billiton admits defeat in Potash fertiliser bid

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Mining giant BHP Billiton Monday cancelled its multi-billion dollar takeover bid for fertiliser-maker Potash Corp after it was rejected by Canada, acknowledging its second major failure in recent weeks.

The world's biggest miner, whose 116 billion US dollar iron ore joint venture with Rio Tinto collapsed last month, insisted its promises to boost jobs and investment in Canada's Saskatchewan province were "unparalleled".

But the pledges were unable to convince Canada's industry minister that the 39 billion US dollar deal for Potash, the globe's top fertiliser producer, would benefit the country.

"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.

The Potash attempt had caused concern in fast-growing China, a major potash importer as well as a key consumer of BHP's iron ore, where state-owned Sinochem tried to mount a rival bid.

Russia's Phosagro has since confirmed interest in Potash. The importance of potash fertiliser has soared in recent years owing to mounting demand for food.

The deal's demise comes after BHP's iron ore joint venture with Rio, another former takeover target, was shelved in October after opposition from a swathe of foreign regulators on anti-competition grounds.

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".

Saskatchewan Premier Brad Wall estimated the province could lose three billion US dollars in royalties over 10 years from Potash Corp under BHP's control.

Canada's Industry Minister Tony Clement finally rejected the offer on November 3, deciding it was unlikely to benefit the country. BHP was given 30 days to come up with sweeteners.

"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 said it would return 4.2 billion US dollars in "excess capital" to its investors after failing to snare Potash, unfreezing a 13 billion US dollar share buy-back scheme.

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

Kloppers said BHP planned to invest 15 billion US globally this financial year. Costs of 350 million US dollars related to the Potash bid would be included as an exceptional item in interim accounts released next month.

The Anglo-Australian miner's shares rose 0.27 percent to 44.42 Australian dollars (43.83 US) in morning trade.

© 2010 AFP

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