OTTAWA – Anglo-Australian miner BHP Billiton hasn’t given up on its hostile takeover bid for fertilizer producer PotashCorp and will continue to talk with the federal government despite its rejection of the offer as not of net benefit to Canada.
“We’re going to engage further with the investment review division and the minister for industry on this issue,” said BHP Billiton spokesman Ruban Yogarajah, who declined to specify what the company plans aside from reviewing its options.
BHP has until Dec. 3 to amend its bid before a final ruling on the transaction, but the Anglo-Australian miner could just walk away from the offer.
Industry Minister Tony Clement said he will listen to what the company might have to say, but he was confident in his decision.
“There are certain obligations in the Act, including sitting down with the bidder to make sure they’re aware of the exact reasoning behind the decision,” he said.
“If they want to avail themselves of that opportunity, we will give them that opportunity.”
In Regina, a hearing at the Saskatchewan Financial Services Commission to challenge PotashCorp’s so-called poison pill defence that was scheduled for next week was cancelled at the request of BHP. A new date for the hearing was not set.
Potash Corp. of Saskatchewan (TSX:POT) is the world’s biggest producer of potash, a key component used in fertilizer, which has been rising in value in recent years on demand from developing countries — especially China — and farmers everywhere seeking to improve crop yields.
Reports suggested that Russian company Phosagro was contemplating making a bid for PotashCorp and a Saskatchewan’s Indigenous Potash Group said it has raised $25 billion that could be invested in PotashCorp.
If a deal is reached, it would be the largest corporate takeover in Canadian history.
Ken Thomas, chief executive of the Indigenous Potash Group which includes five native bands with potash reserves, said he has spoken with the company and he believes it is interested because it remains a takeover target.
“By having us in there with an extra $25 billion in equity we act as a very effective poison pill for another offer,” Thomas said.
The decision by Ottawa on Wednesday followed a fierce and emotional lobbying campaign by Saskatchewan Premier Brad Wall to block the bid.
Wall said Thursday that PotashCorp must now keep promises that it made to the province in recent weeks including its “Pledge to Saskatchewan” that included a commitment to the marketing consortium Canpotex and a promise to relocate top executives to the province.
PotashCorp is headquartered in Saskatoon and has about 200 people at its head office there, but many of the company’s top executive jobs are in Chicago.
In Ottawa, Clement played down concerns that the comment period left the door open for the company to change its bid to make it more palatable to the government.
“Sometimes a cigar is just a cigar,” Clement said of the 30-day wait.
Clement noted he was “quite anxious” to reveal the specific reasons why the deal would not be a net benefit to Canada, but said he was forbidden to do so before the period was over.
Agriculture Minister Gerry Ritz noted Canada’s role in feeding the rest of the world and the role potash plays in that.
“It gives us a power and a strategic position in the global food supply to be a major supplier of both the inputs and the crop production and livestock production that we have,” Ritz said.
The NDP has put forth a motion to change the Investment Canada Act so that the government is forced to hold public hearings with experts and involved communities.
During question period, Prime Minister Stephen Harper said he disagrees with some aspects of the NDP motion, he does agreed “the act should be reviewed.”
Investment guru Stephen Jarislowsky who helped lead opposition to the deal with Alberta businessman Dick Haskayne, was pleased by the government’s decision.
“I think the potash business is going to be a good business, these are not the highest prices for potash that we’ve seen in the last 10 years,” he said.
“The company will always be cyclical because the commodity price is cyclical.”
Jarislowsky, whose clients hold nearly nine million PotashCorp shares, said the deal would have been bad news for Canada.
“I believe that these companies should be head-officed and controlled by Canadian boards of directors,” he said.
PotashCorp and BHP were also in a Chicago court on Thursday, where the Canadian company has accused BHP of misleading investors on the key facts of its takeover bid. BHP has asked the court to throw out the case.
PotashCorp had said BHP was not interested in its nitrogen and phosphate business and that internal company documents dating back to early 2009 suggested BHP would sell the assets if it acquired the company.
In documents filed Tuesday, BHP said it has accurately and consistently stated its plans and that it has no plans to sell PotashCorp’s nitrogen and phosphate businesses.
PotashCorp shares (TSX:POT) fell Thursday, but remained well above BHP’s offer price of US$130 per share, which valued the company at nearly $40 billion. The stock closed down $4.78 at C$141.43 on the Toronto Stock Exchange.
