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The world's biggest mining company gave up on its bid for PotashCorp of Saskatchewan Inc. (POT-N) Sunday night after receiving clear signals from
BHP Billiton Ltd. (BHP-N) said it was withdrawing its hostile $38.6-billion US offer for PotashCorp, but company officials took the unusual step of outlining why they felt
Those promises "would have resulted in a significant net benefit to
But in meetings last week between federal officials and BHP, the government indicated its decision was firm and that there was little prospect that even a sweetened offer by BHP would get approval. There was no negotiation between the two sides, sources said, and Industry Minister Tony Clement was not part of the discussions.
Clement, who delivered an initial rejection of the bid on Nov. 3, said Sunday night there was no obligation by his department to negotiate with BHP on improving its offer and "clearly, [the company] chose not to."
The minister called a news conference late Sunday to offer his first public explanation of why the government turned down one of the largest takeover attempts in Canadian history. Of the six Investment Canada Act guidelines that determine if an investment has a "net benefit," Clement said BHP's bid failed to meet three of them. He said the government felt the takeover would not have a beneficial effect on
Clement said that while BHP is a big, successful mining company, "They do not have comparable experience to PCS in the mining and marketing of potash."
But while the minister has offered assurances that
BHP's chief executive Marius Kloppers spoke to Clement by telephone Saturday morning about the status of the offer. BHP's decision did not come as a surprise, Clement told reporters in
A BHP spokesperson would not comment on what took place in its meetings with government officials, but in a release the company said its original offer included undertakings that were "unparalleled in substance, scope and duration."
In a written statement, BHP made those promises public, which it had planned to do if the offer was approved. The offer also included legally binding undertakings that included spending $450 million (
BHP also said would have applied for a listing on the Toronto Stock Exchange and would have agreed to an "unprecedented monitoring and compliance regime," including offering a $250-million performance bond, to help back its promises on investment and employment.
The Melbourne-based miner also committed to remain a member of the Canpotex potash marketing arm for five years, addressing one of the most contentious issues in its proposed takeover. BHP's plans to exit Canpotex were controversial because the move would have led to a drop in potash prices, and in turn lower royalties from the commodity for the
The potential loss in provincial revenues formed part of Saskatchewan Premier Brad Wall's campaign for
In response, BHP said its intention was to combine its "extensive diversified global experience with the potash experience of PotashCorp to create a world-class Canadian business ... We believe these benefits would have been substantially better than the status quo."
Clement said a parliamentary review of the Investment Canada Act is coming and that, as Industry Minister, he will "make absolutely sure that no one is saying there is not clarity in how we review these kinds of investments."
BHP said it was disappointed with
"We remain committed to
A final decision on whether to proceed with the Jansen project will not be made until late 2011 or early 2012.
With files from Globe and Mail reporter Tara Perkins in Toronto