BHP Billiton’s bid for Potash Corporation of Saskatchewan (PotashCorp) is long dead, and the mining company appears to have moved on with the announcement that it is looking at other M&A opportunities, as well as restarting its $13 bn share buyback program.
But for the Canadian government, which blocked the deal back in November 2010 on the grounds that it wouldn’t be in Canada’s best interests, the bid has raised questions that will continue to occupy it for some time. Namely: how should it deal with bids from overseas in the future? And was the process for rejecting BHP Billiton’s advances robust enough?
As it walked away from the deal, BHP Billiton made sure to pile pressure on the decision makers. In a long and detailed press release, the miner goes through all the reasons why it thinks the transaction should have been given the go-ahead.
The release mentions investment commitments, protections for local suppliers, new job opportunities, the extensive engagement between the mining company and Canadian regulatory officials, and so on and so on. It is a very long release.
Pressure also comes from commentators who suggest Canada’s minority government made its decision to block the bid based on political rather than economic factors. There was strong opposition to BHP Billiton’s proposed acquisition in the province of Saskatchewan and, by rebuffing the bid, the government may have shored up some votes.
Whatever the truth, Canada’s government is now reviewing its options. Tony Clement, Canada’s minister of industry and the man who made the call on the PotashCorp acquisition, has admitted that perhaps things could be improved.
‘The Canada Investment Act is in place to ensure that major foreign investments in our economy are likely to be of net benefit to Canada,’ observes Clement in a statement. ‘Our government does recognize, however, that there may be ways to improve the review process, and any changes deemed necessary will be addressed by our government in a responsible and appropriate manner.’
Clement says he weighed the pros and the cons of the deal, and found it wanting. In turn, now his decision will be weighed.
