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BHP pulls offer for Canada's PotashCorp

Nicholas Grove  |  15 Nov 2010Text size  Decrease  Increase  |  
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Nicholas Grove is a Morningstar journalist.


BHP Billiton (BHP) on Monday said it has withdrawn its US$40 billion all-cash bid offer to acquire fertiliser make Potash Corporation of Saskatchewan (PotashCorp).

The mining giant said the condition of its offer relating to receipt of a net benefit determination by the Canadian government cannot be satisfied, and accordingly, it had withdrawn the offer.

"I don't think it had anything to do with whether the offer was fair and reasonable," Morningstar senior equities analyst Mark Taylor said of the decision.

"I think the Canadian government just decided that they didn't want this particular company to have PotashCorp."

Earlier this month, the Canadian government rejected the offer, with Canadian Minister of Industry Tony Clement stating he was not satisfied the BHP offer was "likely to be of net benefit" to Canada, which is a stated requirement under the country's investment laws.

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The minister had told BHP it had 30 days to make further representations and undertakings with respect to the offer.

In a statement released today, BHP said a total PotashCorp-related transaction cost of approximately US$350 million will be recognised as an exceptional item in its December 2010 interim accounts.

BHP Billiton chief executive officer Marius Kloppers expressed disappointment at the outcome, while emphasising the company's commitment to Canada and disciplined approach to shareholder value.

"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," he said.

"We remain committed to Canada and we plan to develop a significant presence in the potash industry in Saskatchewan."

BHP also said it will reactivate the remaining US$4.2 billion component of its previously suspended US$13 billion buy-back program.

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