Anglo-Australian mining giant BHP Billiton yesterday extended its US$40 billion hostile bid for Canada’s Potash Corp for a month after the country’s regulators requested more information.
BHP, the world’s biggest miner, said it intended to “comply expeditiously” with the Canadian Competition Bureau’s request and had pushed back the Oct. 19 deadline.
“The time for acceptance of the offer has therefore been extended to Nov. 18 2010 to allow time for the completion of the regulatory review of the transaction,” BHP said in a statement to the market.
“BHP Billiton is confident that the offer will receive all requisite regulatory approvals in due course,” it added.
Potash, the world’s largest fertilizer maker, rejected last month’s hostile bid as “wholly inadequate” and said it was exploring other options.
China — a big importer of potash, which is used to make fertilizer — has been uneasy about the BHP bid as it already buys large quantities of the company’s iron ore, and is reportedly considering a rival offer.
On Monday, Saskatchewan Premier Brad Wall publicly questioned whether a foreign takeover of Potash is good for his province or Canada after meeting with BHP Billiton’s chief executive officer Marius Kloppers.
Wall’s remarks came on the same day Canadian Prime Minister Stephen Harper told the Canadian Parliament that foreign takeovers are not automatically approved.
Harper’s federal government can block a foreign takeover if it’s not a “net benefit” to Canada. Harper has asked for Wall’s input.
Wall is wary of both a Chinese and BHP takeover of Potash.
“The question needs to be, ‘Are Saskatchewan people, are Canadians better off as a result of this, is our economy stronger as a result of this very large deal?’” Wall said.
“We’re doing our homework, we’ll see what all of that due diligence tells us, but as of today I’m having a hard time answering that question in the affirmative,” Wall said.
Wall said his meeting with Kloppers was friendly and frank, but he was no more supportive of the hostile takeover bid for Saskatchewan’s biggest company than he was beforehand.
“This government’s position has not been to give a blank check to foreign takeovers,” Harper said in Parliament. “There is a law in place. I have spoken about the particular case with the premier of Saskatchewan and obviously we will examine his concerns as we do the review that is required under the Foreign Investment Review Act.”
Harper’s government blocked a US company’s takeover of the space and satellite division of MacDonald, Dettwiler and Associates Ltd, Canada’s leading space technology firm, in 2008. It was the first time Canada has rejected a foreign takeover outright since the Canada Investment Act took effect in 1989.
However, Harper’s Conservative government is a staunch supporter of free trade and has allowed recent Chinese investment in Canada’s oil sands sector.
Saskatchewan’s resource minister has said a state-owned Chinese buyer would want to overproduce and drive down prices, which would hurt the province financially.
The province also does not want BHP to pull out of the Canpotex potash marketing cartel if it gets the company. Canpotex represents Saskatchewan’s three largest potash producers in sales of potash outside North America. BHP has said it would pull out of the cartel and sell potash itself.