|BHP Billiton pulls takeover of PotashCorp||| Print ||
|Written by Ryan Charkow|
|Monday, 15 November 2010 15:52|
BHP Billiton has officially rescinded its bid for a hostile takeover of Saskatchewan-based PotashCorp.
Their decision comes nearly two weeks after the federal government rejected the Anglo-Australian mining powerhouse’s $38.6 billion offer, citing a lack of benefit to the Canadian economy.
Industry Minister Tony Clement said the offer was not accepted because although BHP is a respected mining firm, they did not have sufficient experience with potash, a key ingredient in fertilizer.
“My concern was that the successful bid could jeopardize the benefits that Canadians derive from the industry,” he said to members of the Toronto press.
In a news release, PotashCorp said they believed BHP’s offer “substantially undervalued PotashCorp” and subsequently did not acknowledge the company’s current value to the Canadian economy nor its potential for successful expansion in the future.
“As the food requirements of our growing global population continue to increase,” the company said, “we believe PotashCorp has the right strategies in place to enhance earnings in the strong market conditions we see unfolding.”
BHP said it would not have been feasible to restructure their offer based on Clement’s interim ruling on Nov. 3 because proposed changes “would have conflicted with BHP Billiton’s business strategy and been counter to creating shareholder value.”
CEO Marius Klopper said in a press release he was disappointed to have to withdraw BHP’s offer, the company plans to maintain a presence in Canada.
“We remain committed to Canada and we plan to develop a significant presence in the potash industry in Saskatchewan,” he said.
A report in the Toronto Star said the government’s decision to reject BHP’s bid represented only the second time Ottawa made such a ruling. The only other instance occurred in 2008 when MacDonald, Dettwiller and Associates Ltd. was prevented from selling its space division to Alliant Techsystems Inc., an American defence firm.
Clement said he would elaborate on the government’s decision in due time and hopes this will generate discussion on how to improve the Investment Canada Act.
"Within some people's minds it has raised issues about what the ground rules are going to be henceforth, so that's why I believe it's prudent for me to explain in a little bit more detail," he said.
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