Mining giant BHP Billiton on Monday abandoned its $39-billion takeover bid for fertiliser-maker Potash Corporation after it was rejected by Canada, acknowledging its second major failure in recent weeks.
The world’s biggest miner, whose $116-billion iron ore merger with Rio Tinto collapsed last month, said its “unparalleled” pledges on jobs and investment could not convince the country’s government of the deal’s merits.
“Unfortunately, despite having received all required anti-trust clearances for the offer, we have not been able to obtain clearance under the Investment Canada Act and have accordingly decided to withdraw the offer,” chief executive Marius Kloppers said.
Canada’s Potash said BHP’s offer “substantially undervalued” the world-leading manufacturer of fertiliser, considered strategically important as global food security worries mount.
The bid “failed to reflect both the value of our premier position in a strategically vital industry and our future growth prospects”, Potash said in a statement.
Hostile takeover
The deal’s formal demise comes shortly after BHP’s iron ore joint venture with arch-rival Rio was shelved in October after opposition from a swathe of foreign regulators on anti-competition grounds.
In November 2008, BHP was forced to shelve a $147-billion hostile takeover for fellow Anglo-Australian miner Rio as the financial crisis sent commodities prices plummeting.
BHP launched its hostile, all-cash bid for Potash in August, valuing it at $38,6-billion, an offer the Canadian firm immediately rejected as “wholly inadequate”.
Saskatchewan Premier Brad Wall estimated the province could lose $3-billion in royalties over 10 years from Potash under BHP’s control.
Canada’s Industry Minister, Tony Clement, rejected the offer on November 3, deciding it was unlikely to benefit the country. BHP was given 30 days to come up with sweeteners.
“BHP Billiton continues to believe its offer would have resulted in a significant net benefit to Canada, Saskatchewan and New Brunswick,” the miner said in a statement. “As a package, the proposed undertakings offered by BHP Billiton … were unparalleled in substance, scope and duration, reflecting the importance of potash to Canada and Saskatchewan.”
Concern
The attempt had also caused concern in fast-growing China, a major Potash importer and a key consumer of BHP’s iron ore, where state-owned Sinochem tried to mount a rival bid. Russia’s Phosagro has since confirmed interest.
BHP said it would return $4,2-billion in “excess capital” to its investors after failing to snare Potash, unfreezing a $13-billion share buy-back scheme.
Kloppers said BHP planned to invest $15-billion globally this financial year. Costs of $350-million related to the Potash bid would be included as an exceptional item in interim accounts released next month.
BHP is rumoured to be eyeing Woodside Petroleum, Australia’s second-biggest oil and gas company, after Royal Dutch Shell sold $3,3-billion US dollars in shares, or a third of its stake. — AFP