BHP Billiton Ltd. isn’t interested in extending a deadline on a government review of its $40 billion takeover bid of Potash Corp. of Saskatchewan Inc., said Andrew Mackenzie, BHP’s head of non-ferrous businesses.
Under the Investment Canada Act, the government can block any transaction valued at C$299 million ($291 million) or more if it finds it doesn’t provide a “net benefit” to the country, based on factors such as economic activity and jobs. Canada has until Nov. 3 to complete a review of the bid, unless BHP, the world’s largest mining company, agrees to an extension.
“I’m not that interested, I want the whole thing done by Nov. 3,” Mackenzie said today in a telephone interview from Ottawa. “I think all the facts are on the table and it would benefit from an early resolution.”
Saskatchewan Premier Brad Wall said yesterday that a takeover would cut provincial revenue, lead to fewer jobs and forfeit Canadian control of an important national resource. Wall ruled out further talks with Melbourne-based BHP and said that if the transaction was forced through, Saskatchewan would use “the taxation tools of the province to make sure we are protected.”
Mackenzie said if talks were to resume, BHP and the province of Saskatchewan, where Potash Corp. is based, would have little separating them on an agreement.
“I’m optimistic because the premier has told us he is committed to free markets,” Mackenzie said.
BHP has said it would make Saskatchewan home to its head office for potash operations, continue developing its Jansen potash mining project in the province, maintain current employment levels and propose a Canadian nominee for election to its board.
“If you walk away from a proposition like this you are starting to send a signal that you’re not open for business and that you will make it harder in the future to attract capital both into Saskatchewan and Canada and you will make it harder for Canadian companies to invest overseas,” Mackenzie said.
Saskatchewan has put pressure on BHP to commit to Canpotex, an organization that handles potash exports to outside North America, on concern its exit would reduce the region’s revenue. Canpotex handles shipments for Potash Corp., Agrium Inc. and Mosaic Co., which together account for as much as 40 percent of global trade in the crop nutrient.
Not Head Waiter
Tony Clement, the Canadian minister in charge of reviewing the hostile offer, reiterated today that he won’t be swayed after Saskatchewan said the federal government should block the bid.
“I’m neither the head waiter to the premier of Saskatchewan, nor am I a butler to the president of BHP,” Clement told reporters in Toronto today. Clement said he hadn’t yet decided whether to approve the bid.
“It’s very difficult to prevent a sale,” said Laurence Booth, a professor of finance at University of Toronto’s Rotman School of Management. “We’ve allowed the sale of a number of what were regarded as crown jewels of Canada.”
Potash Corp. rejected BHP’s offer in August as too low and said it was seeking alternative offers amid rising prices for agricultural commodities.
Leaders from Canada’s opposition parties yesterday urged the government to reject the offer. Liberal Party Deputy Leader Ralph Goodale, who comes from Saskatchewan, said there will be “consequences” for the government if it ignores Wall’s appeal. New Democratic Party Leader Jack Layton said it was important the country protect its “strategic jewels.”
Federal government leaders sought to stop national sentiment from affecting the review. John Baird, leader of the governing Conservative Party in Parliament, told lawmakers that 51 percent of Potash Corp. is owned by non-Canadians and 38 percent by U.S. residents. A day earlier, Prime Minister Stephen Harper had said the proposed deal was a case of an Australian company buying an “American-controlled” company.
In the past 25 years, Canada has only formally rejected one takeover offer, Alliant Techsystems Inc.’s bid for MacDonald Dettwiler & Associates Ltd.’s space business in 2008.
Saskatchewan is home to the world’s largest reserves of potash, a form of potassium farmers use to boost crop yields. Saskatoon-based Potash Corp. is the world’s largest maker of potash by capacity and produces nitrogen- and phosphate-based crop nutrients.