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Canada Plans New Guidance on Takeovers After Potash Rejection, Harper Says
Canada’s prime minister said his government plans to provide “guidance” to investors on what kinds of foreign takeovers it will tolerate, after the country rejected Melbourne-based BHP Billiton Ltd.’s bid to acquire Potash Corp. of Saskatchewan Inc.
Stephen Harper, speaking to reporters today at the Asia- Pacific Economic Cooperation summit in Yokohama, Japan, said he will outline the policy once a 30-day appeal process for BHP ends. Harper this week also attended a summit of Group of 20 leaders in Seoul, where he held bilateral talks with Australian Prime Minister Julia Gillard.
“When the period expires, the government will be in a position not only to give reasons for the decision but to give broader guidance to the investment community on the kind of foreign investment it is and is not seeking within Canada,” Harper said.
Harper’s government rejected BHP’s $40 billion bid on Nov. 3, saying the proposal doesn’t provide a “net benefit” to Canada. Under Canadian law, BHP has 30 days from the date of the ruling to appeal.
Harper said that while Gillard raised the issue in discussions this week, no other G-20 or APEC leader brought up Canada’s decision.
‘Open Investment’ Regime
“It’s important to note that Australia has exactly the same kind of review process for such acquisitions,” Harper said, adding that Canada has had one of the most “open investment regimes” in the world. It would be “an interesting question to ask whether any other country would approve a similar transaction.”
Potash is the world’s largest fertilizer company. The company’s shares have fallen 3.3 percent to C$141.37 since the decision. The decision was only the nation’s second rejection of a foreign takeover in the past 25 years.
Harper said Nov. 4 the choice “is clearly in the best interests of the Canadian economy,” and that it was “a rare case where even a large number, if not most, of the people in favor of foreign investment opposed this decision.”
Industry Minister Tony Clement, who moved to block the deal, said the government’s ruling was “principled” and based on Canadian law, rather than a “political” one.
More than half of the country’s top 15 companies by market value, including Royal Bank of Canada and BCE Inc., are prevented from being owned by foreigners. Canada restricts foreign ownership in banking, insurance, telecommunications, broadcasting, energy and airlines.
The country sits on the largest pool of oil reserves outside the Middle East, and is a major exporter of natural gas, wheat and gold.
To contact the reporter on this story: Theophilos Argitis in Seoul at targitis@bloomberg.net
To contact the editor responsible for this story: Bill Austin at billaustin@bloomberg.net
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