The Canadian minister in charge of reviewing BHP Billiton Ltd.’s $40 billion hostile offer for Potash Corp. of Saskatchewan Inc. said 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,” Industry Minister Tony Clement told reporters outside Parliament yesterday. Clement said he hadn’t yet decided whether to approve the bid.
Clement spoke after Saskatchewan Premier Brad Wall said 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 deal was forced through, Saskatchewan would use “the taxation tools of the province to make sure we are protected.”
BHP is seeking Canadian government approval to proceed with its $130-a-share hostile offer. Canada has until Nov. 3 to complete a review of the bid, unless BHP, the world’s largest mining company, agrees to an extension. Wall’s speech yesterday in the provincial capital of Regina will be the basis of Saskatchewan’s recommendation to the federal government.
“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. rose 66 cents, or 0.5 percent, to $143.09 at 4:15 p.m. in New York Stock Exchange composite trading yesterday. BHP gained 0.9 percent to close at 2,212 pence in London.
Under the Investment Canada Act, the federal government can block any transaction valued at C$299 million ($291 million) or more if it finds the deal doesn’t provide “net benefits” to the country, based on factors such as economic activity, employment and productivity.
BHP’s bid wouldn’t provide a net benefit to the country or Saskatchewan, Wall said.
BHP has said it would make Saskatchewan home to its head office for potash operations, continue developing its Jansen potash mining project, maintain current employment levels and propose a Canadian nominee for election to its board.
Ruban Yogarajah, a spokesman for BHP, didn’t immediately respond yesterday to voicemail and e-mail messages seeking comment.
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 diffuse 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 it was the case of an Australian company buying an “American-controlled” company.
BHP’s offer “is different,” Wall said yesterday. “This is not like any other takeover.”
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.
Wall said that in some foreign takeovers of Canadian companies, promises by the acquirer weren’t kept, citing Rio Tinto Group’s purchase of Canadian aluminum producer Alcan Inc. in 2007.
“In every single takeover of a natural resources company in our country as of late, promises have been made and promises are broken,” Wall said.
“I know what my demeanor is, what my company’s track record and experience is, of sticking to its agreements over many decades,” BHP Chief Executive Officer Marius Kloppers told reporters in London yesterday after the company’s annual general meeting.
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.