BHP Withdraws Takeover Offer for Potash
By MICHAEL J. DE LA MERCED
7:50 p.m. | Updated BHP Billiton said Sunday that it withdrew its $38.6 billion unsolicited takeover offer for the Potash Corporation of Saskatchewan, the world’s biggest producers of a key fertilizer ingredient, after the Canadian government blocked the potential deal.
BHP’s decision was all but preordained after the Canadian government’s decision earlier this month, which scuttled it for not representing a “net benefit” for Canada. While BHP had 30 days to change the Canadian industry minister’s mind, people briefed on the matter have said that such efforts were probably futile.
“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,” Marius Kloppers, BHP’s chief executive, said in a statement on Sunday.
Both Potash and the government of its home province, Saskatchewan, had fiercely lobbied Canada’s Conservative government to block the deal, citing what amounted to national security concerns. Potash produces about half of the world’s supply of the eponymous material and hauls in significant revenue for the Saskatchewan government.
Potash itself had argued that BHP’s offer was too low.
“BHP Billiton’s decision to withdraw its offer underscores the PotashCorp board of directors’ unanimous belief that the BHP Billiton offer substantially undervalued PotashCorp and failed to reflect both the value of our premier position in a strategically vital industry and our future growth prospects,” the company said in a statement.
In its statement on Sunday, BHP outlined a host of concessions it had been willing to make to secure passage of the deal, including investments in Saskatchewan and the foregoing of tax breaks.
The international mining giant said it will instead reinstate a stock-buyback program, spending up to $4.2 billion repurchasing shares. It will also press forward with plans to develop its own potash-mining operations in Saskatchewan, a process that will likely take years to bear fruit.
The Potash defeat marks the third failed deal-making attempt by BHP, after both a hostile bid for and a proposed joint venture with Rio Tinto collapsed in recent years.
The Canadian national government’s decision was made under the Investment Canada Act, which vests authority under the industry minister and requires only that companies show a “net benefit” to Canada, a largely subjective assessment.
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