03 November 2010 22:35 [Source: ICIS news]
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Clement said the offer did not present a likely net benefit to Canada, adding that he had notified BHP of the decision. The proposal was terminated under the Investment Canada Act, marking only the second time in the 25-year history of the law that a bid was blocked.
BHP can appeal the decision and has 30 days to submit a new bid, Clement said.
Following the announcement, PotashCorp’s stock dropped $7.98, or 5.5%, to $137.52/share in after-hours electronic trading on the New York Stock Exchange.
The deal had been opposed by Saskatchewan Premier Brad Wall, who said approval of the deal would be “a profound betrayal of our province and its people” and did not rule out a constitutional challenge based on provincial ownership of resources.
The legislature in Saskatchewan, where PotashCorp is based, had unanimously called on the government in Ottawa to reject BHP’s bid.
Saskatchewan’s lawmakers were of the opinion that a BHP takeover posed a potential risk to jobs, provincial revenue and Canada’s strategic interest, according to news media reports.
PotashCorp's management had also said the bid was too low.
If approved, BHP was said to preparing to sweeten its $130/share offer to win shareholder approval, with some analysts estimating a successful offer would have to top $155/share.
UBS analysts said on Tuesday that BHP’s bid could go as high as $165/share.
The group's core included five of the 24 First Nations groups, which reside in Canada’s Potash Belt, Gamble said.
The group has organised a consortium of foreign investors from China, India and Brazil to go along with Canadian pension funds for a bid to be filed on 18 November, he said.
Additional reporting by Ben DuBose
($1 = €0.71)
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