UpdateSaskatchewan rejects PotashCorp sale to BHP Billiton

21 October 2010 23:19  [Source: ICIS news]

(adds PotashCorp statements in paragraphs 9-11)

HOUSTON (ICIS)--The government of Saskatchewan will not support BHP Billiton's takeover of PotashCorp because the benefits of the deal will not offset the costs for the province, Saskatchewan Premier Brad Wall said on Thursday.

Speaking in the provincial capital of Regina, Wall said Saskatchewan recommended that Canada’s Minister of Industry rejects BHP’s $39bn (€28bn) hostile takeover bid of PotashCorp approval. The Minister of Industry was expected to render a decision on the takeover on 3 November.

Saskatchewan claimed that it would lose up to Canadian dollar (C$) 3bn in lost royalties and taxes on potash sales if the takeover deal goes through and wanted BHP to agree to provide the province C$3bn over a 10-year period to replace the lost revenue.

"It was a tough decision, but [the takeover] would not be good for jobs and government revenues, so we must say no,” Wall said.

Wall said the government evaluated the takeover bid and determined that it failed the "net benefit" test in three key areas: jobs and investment; Canadian control of an important Canadian resource, and provincial revenues.

"BHP Billiton's public statements about Canpotex and about operating at full production create serious concern about the future of Canpotex," Wall said.

"This in turn puts $6bn worth of capital expansion and thousands of jobs at risk," he said.

"The people of Saskatchewan are justifiably proud of PotashCorp and the success it has achieved here and around the world," Wall said. "Do we want to add PotashCorp to that list of once-proud Canadian companies that are now under foreign control?"

PotashCorp issued a statement thanking the province “for its thorough and thoughtful review of this matter”.

Noting that its board of directors recommended that shareholders reject BHP’s bid, the company said it had more than 2,400 employees in Saskatchewan and New Brunswick.

“Our corporate name says it all. We are Potash Corporation of Saskatchewan,” the company said.

Wall also said a BHP Billiton takeover would mean a significant loss in provincial revenues that were needed to fund roads, schools and hospitals.

Additionally, Wall expressed concerns about the ability of federal authorities to enforce an agreement with BHP.

"In the past decade, promises about maintaining jobs, corporate headquarters and future investment have all been broken," Wall said. "We simply cannot take that risk with this valuable resource that belongs to the people of Saskatchewan."

Saskatchewan would forward its recommendation to Investment Canada and Canada’s Minister of Industry.
BHP allegedly offered Saskatchewan a C$370 (US$359m) one-time payment, news sources said.

BHP offered on Wednesday commitments to Saskatchewan that it said should address any worries that its takeover of PotashCorp would hurt the province

Shares of PotashCorp traded at $143.09, up 66 cents, at 16:54 hours Houston time (21:54 hours GMT) on the New York Stock Exchange.

Additional reporting by Stefan Baumgarten and Brian Ford

($1 = €0.72, $1 = C$1.03)

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By: Frank Zaworski
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