BHP's Potash bid stirs little Canadian hostility yet

Tue Aug 17, 2010 4:48pm EDT
 
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By Louise Egan

OTTAWA (Reuters) - Canada said on Tuesday it would conduct a rigorous review of any foreign takeover of Potash Corp as the Conservatives seek to avoid the kind of political backlash such deals have triggered in the past.

Anglo-Australian miner BHP Billiton this week launched an unsolicited $38.6 billion bid to acquire Potash Corp of Saskatchewan, the world's biggest fertilizer producer.

Potash rejected the offer on Tuesday as "grossly inadequate" but Chief Executive Bill Doyle said the company is not opposed to a sale, effectively telegraphing that the assets are in play.

Under Canadian law, BHP would have to prove the deal would be of net benefit to Canada, a loosely defined test that gives the federal industry minister powers to negotiate commitments over jobs and head offices, for example.

"The government is aware of this proposed transaction and will monitor the situation closely to determine how the Investment Canada Act applies," said Erik Waddell, spokesman for Industry Minister Tony Clement.

"The review process is rigorous, involving consultations with affected provinces/territories and other government departments as required," he wrote in an email.

Prime Minister Stephen Harper, who heads a minority government, has come under attack for approving big takeovers by companies that later laid off Canadian workers. But the initial political reaction to the BHP Billiton offer was muted.

Liberal lawmaker Marc Garneau simply said any large deal should abide by the existing foreign investment rules. The left-leaning New Democrats demanded the government oblige global players like BHP Billiton to invest in new technology and safeguard local jobs.   Continued...