Protectionism reigns as Canada blocks potash bid

By Simon Moores
Published: Thursday, 04 November 2010

Deal not dead: 30 days for BHP response, PotashCorp reiterates low value of bid

Both PotashCorp and BHP Billiton have been left deflated after the Canadian government took the rare step and blocked its unsolicited $38.6bn bid.

Ottawa ruled that BHP’s bid to enter the world of fertiliser minerals offered no benefit to the country, a decision that has been widely criticised in the free market.

It is only the second time in history that Canada has blocked a takeover.

“ I can confirm that I have sent a notice to BHP Billiton indicating that, at this time, I am not satisfied that the proposed transaction is likely to be of net benefit to Canada,” said Canada’s minister of industry, Tony Clement.

Reasons behind the move could not be given at the time with a 30 day appeal process now in motion, but political pressure, particularly form PotashCorp’s home-province of Saskatchewan was intense with domestic legal action threatened.

But while the country has not outline reasons for blocking the bid, they appear to be few and far between.

This has put Canada’s once open policy on foreign investment under question.

Clement said: “Canada has a long-standing reputation for welcoming foreign investment. The Government of Canada remains committed to maintaining an open climate for investment.”

BHP said it was “disappointed” in the outcome while PotashCorp reiterated the low value of the $130/share bid.  

The few words of reaction from both companies strongly suggest a deal is still on the cards in the business arena, but in Canada it appears the power now lies with the policy-makers.

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