Canada Stymies BHP's Potash Bid, for Now
OTTAWA (TheStreet) -- The Canadian government ended days of speculation by shooting down BHP Billiton's (BHP) - Get Report $40 billion proposal to acquire Potash (POT) , the world's largest fertilizer producer.
But regulators left BHP some wiggle room, giving the Anglo-Australian giant 30 days within which to "convince" Canada's industry minister, Tony Clement, to change his mind.
Shares of Potash immediately dropped in afterhours trading Wednesday, changing hands in recent trades at $138.93, down about 4% from the regular session close.
Clement's office has evidently given BHP a set of demands, which the ministry did not make public. The miner now has the next 30 days "to make any additional representations and submit any undertakings," Clement said in a prepared statement.
BHP's takeover pursuit of Potash has fueled a national debate in Canada that has taken over the headlines. In recent years, Canadian regulators have given passes to the likes of
Vale
(VALE) - Get Report
and U.S. Steel in their efforts to acquire big metals and natural resources companies. The debate has made for unlikely bedfellows and has pitted those who fear the ramifications of stymied free trade with those who worry about selling off important Canadian resources to foreign entities.
In the statement from Investment Canada, the regulatory body with final say over the deal, Clement was eager to note that his decision didn't mean that his office had become protectionist. "Canada has a long-standing reputation for welcoming foreign investment. The Government of Canada remains committed to maintaining an open climate for investment," Clement said.
Last month, the government of Saskatchewan also said it disapproved of a BHP acquisition, arguing that a takeover would reduce the province's tax and royalty revenue. BHP officials have countered by saying that a combined Potash-BHP would make concessions to the province.
-- Written by Scott Eden in New York
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