Feds turn down BHP's takeover of Potash Corp.
Wednesday, November 3, 2010 at 06:31PM Clement gives BHP 30 days to improve their offer before final decision
The federal government has rejected BHP Billiton's $40 billion hostile takeover of Potash Corporation of Saskatchewan.
Industry Minister Tony Clement said Wednesday Canada wants to attract investment and business, but "some decisions can only be made once … and there's no turning back, ever."
He said BHP's offer for PotashCorp would not benefit the country — but he did appear to leave the door open to BHP to make a better offer.
"BHP Billiton has 30 days to make any additional representations and submit any undertakings," Clement said. "At the end of that period, I will make a final decision."
NDP leader Jack Layton said public pressure on the government "has had an impact here. And I believe the support [the people of Saskatchewan] had from across the country… has shaken this government."
Shares in PotashCorp fell $9.31, or 6.4 per cent, in after hours trading to $136.19 US.
Prime Minister Stephen Harper's minority government had faced pressure from four provinces — Saskatchewan, Alberta, Manitoba and Quebec — and in the House of Commons to disallow the takeover.
Harper's Conservatives hold 13 of 14 seats in Saskatchewan.
Saskatchewan Premier Brad Wall has opposed the sale, citing a study that talked about losses in provincial revenues over the next decade, and because potash is a strategic resource. The province produces 30 per cent of the world's potash, a crop nutrient.
BHP Billiton has offered to offset provincial revenue losses by contributing to an infrastructure fund, a proposal Saskatchewan officials have called inadequate.
In New Brunswick, the company has embarked on a new mining operation valued at $1.7 billion, and politicians in that province have supported Wall's position against a takeover.
In a letter sent last week to Harper, New Brunswick Premier David Alward said he had "concerns" about the proposed takeover, but he also acknowledged the jurisdiction of the federal government to make the decision under the Investment Canada Act.
If it goes through, the deal would add to the list of takeovers of Canada's largest natural resource companies over the last decade. They include the Swiss company Xstrata's acquisition of nickel producer Falconbridge in 2006, the purchase by Brazil's Vale of Inco in 2007, and the takeover by U.K.'s Rio Tinto of Alcan, also in 2007.
The federal government has come under fire for its handling of recent foreign acquisitions.
Vale's takeover of Inco was criticized during a year-long strike involving the company's operations in Sudbury, Ont. Vale employees in Voisey's Bay, N.L., are still on strike.
And Ottawa is in the midst of a lengthy court case with U.S. Steel Corp., which acquired the former Stelco in 2007.
The federal government has reviewed 1,637 takeovers since 1985 and rejected only one, the bid in 2008 by American firm Alliant Techsystems for Vancouver-based MacDonald Dettwiler & Associates Ltd.'s information systems, satellite and space mission businesses.
From CBC News
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