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Canada blocks BHP takeover bid for PotashCorp

November 05/2010

(ICIS)--The Canadian government rejected BHP Billitons $39bn (?28bn) hostile foreign takeover bid for PotashCorp, Industry Minister Tony Clement said on Wednesday. Clement said the offer did not present a likely net benefit to Canada, adding that he had notified BHP of the decision.


The proposal was terminated under the Investment Canada Act, marking only the second time in the 25-year history of the law that a bid was blocked.
Following the announcement, PotashCorps stock dropped $7.98, or 5.5%, to $137.52/share in after-hours electronic trading on the New York Stock Exchange.


The deal had been opposed by Saskatchewan Premier Brad Wall, who said approval of the deal would be a profound betrayal of our province and its people and did not rule out a constitutional challenge based on provincial ownership of resources. The legislature in Saskatchewan, where PotashCorp is based, had unanimously called on the government in Ottawa to reject BHPs bid.


Saskatchewans lawmakers were of the opinion that a BHP takeover posed a potential risk to jobs, provincial revenue and Canadas strategic interest, according to news media reports.


If approved, BHP was said to preparing to sweeten its $130/share offer to win shareholder approval, with some analysts estimating a successful offer would have to top $155/share.


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