23 November 2010 16:24 [Source: ICIS news]
K+S's agreed bid for Potash One on 22 November came amid some doubt over foreign investment in Canada after the government this month blocked BHP Billiton’s $39bn hostile bid for PotashCorp – only the second time since 1985 that a foreign takeover of a Canadian company was rejected.
However, Horst Hueniken, a research analyst at
The takeover by Germany’s K+S would provide the necessary capital to develop the project in Saskatchewan province, thus creating jobs and providing a new tax revenue stream for the government, Hueniken said in a briefing on Canadian television.
In the case of BHP’s bid for PotashCorp, Hueniken said, the government had been concerned about tax revenue losses, the possibility that BHP could take PotashCorp out of the Canpotex potash export marketing group and the effects on global potash pricing.
“None of these issues apply in [the Potash One] instance. [Potash One] is far too small a player to have a meaningful impact on potash pricing,” said Hueniken.
“In this case, there are no tax revenues being lost, because there were no tax revenues to begin with,” he added.
Commentators also noted that
In a televised interview on 22 November, Wall said Saskatchewan welcomed K+S's move as a foreign investment that would lead to the development of a new mine in the province.
Wall also said the government would “strongly encourage” K+S to join Canpotex.
Canpotex, which includes PotashCorp, Agrium and Mosaic, was a “strong marketing alliance” that gave
Wall added that
If all three projects – K+S/Potash One, BHP and Vale – were to be completed, they could threaten PotashCorp’s leading role in global potash markets, analysts said.
($1 = C$1.02)
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