OTTAWA (Reuters) - The Canadian government on Wednesday blocked BHP Billiton’s $39 billion (24.2 billion pound) bid for Potash Corp, the world’s biggest producer of a key crop nutrient, halting what had been the world’s biggest takeover attempt this year and sending Potash Corp shares tumbling.
Ottawa said the Anglo-Australian miner’s takeover bid offered no likely net benefit to the country as required by Canadian law. BHP has 30 days to make additional representations to the Canadian government before the decision is final.
“In Canada, our natural resources are an important economic driver,” Industry Minister Tony Clement said. “...I have come to the conclusion that BHP Billiton does not present a likely net benefit to Canada.”
Potash Corp shares fell more than 4 percent in after-market trading in New York following the announcement.
The decision comes after strong opposition from the province of Saskatchewan, where Potash Corp is based, which feared losing billions of dollars in taxes and royalties.
Ottawa’s deliberation was widely framed by the media as the minority Conservative government trying to balance the need to give positive signals to foreign investors against a potentially damaging backlash from Saskatchewan voters.
The government had blocked a foreign takeover only once before. Under Canada’s Investment Canada Act, a foreign takeover must have a net benefit for the country in terms of jobs, exports, production and investment.
BHP’s bid for Potash Corp came as population and income growth in developing countries like China and India create a bullish long-term outlook for fertilizer and food production.
The takeover would have still needed approval from the Saskatchewan securities regulator and Potash shareholders later this month.
Potash Corp management rejected the offer as too low.
Editing by Peter Galloway
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