BHP bid for Potash gets green light in Canada
Tuesday 05 October 2010
BHP Billiton's $39bn (£24.5bn) hostile bid for PotashCorp of Saskatchewan took another twist yesterday when an influential body investigating the economic implications of any takeover said that an agreement with the mining giant would be more beneficial to the province than a deal with rival suitor, China's Sinochem.
The Conference Board of Canada said that while a takeover of PotashCorp by the world's biggest mining company could lead to a C$2bn fall in provincial revenues over the next 10 years, "because BHP needs to produce an economic return, the way BHP would put capacity in place and run the operation is much more aligned to the province's interest".
Saskatchewan's Energy and Resources Minister Bill Boyd admitted that the potential revenue hit was "concerning," adding that altering the royalty structure to offset the loss would be bad for the industry and hurt other potash players. "There are both pluses and minuses to this BHP bid," Mr Boyd said in a statement.
Despite the mixed response to BHP's bid, the board suggested that any rival offer from China's state-owned chemicals group Sinochem would present, "a riskier scenario for the province," because of the Chinese group's, "state-owned and consumer-led orientation."
The Beijing government, worried about BHP taking a dominate role in the potash market, has ordered Sinochem to investigate ways of blocking the bid, possibly by taking a minority stake of its own. In recent weeks, Sinochem has emerged as the only serious rival to BHP, but so far has been unable to put a rival deal together.
The board's reaction to the possibility of a deal with Sinochem will come as a blow to PotashCorp, which has accused BHP of trying to "steal" the company with its $130-a-share offer.
The Anglo-Australian mining company has refused to rule out an increased offer but, speaking in August, its chief executive Marius Kloppers, said: "I have only seen one bid, our bid. An interloper may emerge, but we are the only game in town at this stage. It is an all-cash bid with as few pre-conditions as possible and our focus is on completing a great deal for shareholders, ours and theirs."
In a statement yesterday, a BHP spokesman said: "BHP Billiton will be studying the contents of the report of the Conference Board of Canada (CBOC) regarding the acquisition of PotashCorp. Company officials were invited to participate in the CBOC's deliberations and BHP Billiton welcomes this examination of the potash sector and its potential.
"We believe our offer for the acquisition of PotashCorp will bring significant net benefits to Saskatchewan and to Canada."
A PotashCorp spokesman said that the group was considering the recommendations.
- 1 Mario Balotelli: Staff at arson-hit Manchester Dogs' Home convinced Liverpool striker is behind five-figure donation
- 2 Friends 20th anniversary: Alison Jackson photographs reunited cast
- 3 There is literally not a single woman in this iPhone 6 queue
- 4 Hitler’s former food taster reveals the horrors of the Wolf’s Lair
- 5 Scottish independence: Tory revolt against 'devo max' grows as Rail Minister Claire Perry joins
Scottish independence referendum: Frankie Boyle reacts to nation's 'No' vote - 'To be fair, I've always hated Scotland'
Scottish independence live: Scotland gives a clear 'No' in historic referendum - as it happened
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Scottish independence: Tory revolt against 'devo max' grows as Rail Minister Claire Perry joins
Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...