Canada blocks Potash from foreign takeover

TORONTO – Canada’s government has tentatively blocked BHP Billiton’s foreign takeover bid for Potash Corp. of Saskatchewan.

Industry Minister Tony Clement said Wednesday that at this time he’s not satisfied the proposed transaction is likely to be a net benefit to Canada. Clement said BHP has 30 days to appeal.

“BHP Billiton has 30 days to make any additional representations and submit any undertakings,” Clement said. “At the end of that period, I will make a final decision.”

Anglo-Australian BHP Billiton, the world’s largest mining company, is attempting a hostile $38.6 billion takeover of Potash Corp., a Saskatchewan-based company that controls more than 25 percent of the world’s supply of potash, a fertilizer ingredient critical to the global food supply.

Had the deal been approved by the government and shareholders, it would have been the biggest takeover in the world this year, and one of the biggest in Canadian history.

A foreign takeover rejection is rare in Canada and risks the country’s reputation of being in favor of foreign investment.

Canada’s government faces a dilemma. On the one hand, it firmly believes in the free market. On the other, it would be risky for a federal prime minister to overrule a provincial premier from western Canada. Brad Wall, Saskatchewan’s premier, is dead set against the takeover.

Opposition to the deal gained steam in recent weeks as conservatives in Prime Minister Stephen Harper’s home province of Alberta – Canada’s most conservative province – spoke against it.

Wall ran a vigorous campaign for Canadian hearts and minds. He said approval of the bid would have been “profound betrayal” of Saskatchewan and its people.

Wall thanked Clement for the decision. He said he too struggled with the decision.