BHP Potash bid said to win key Canada government backing

Mon Nov 1, 2010 7:18pm EDT
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By David Ljunggren and Pav Jordan

OTTAWA/TORONTO (Reuters) - Canadian officials are recommending a cautious "yes" to BHP's bid for Potash Corp, a newspaper said on Monday, but the Prime Minister's office dismissed the paper's assertion that the prime minister himself would have the final say.

Canada's National Post, quoting insiders from the ruling Conservative Party, said Investment Canada officials recommended that Ottawa let the world's largest miner proceed with its $39 billion hostile offer for Potash. It said Prime Minister Stephen Harper would decide on Tuesday.

Potash Corp stock rose in after-hours trade.

But Harper's office said the story was wrong because Industry Minister Tony Clement, not the prime minister, would have the final say in whether to allow the takeover. The decision is due by midnight on November 3 (0400 GMT on November 4).

"The entire story is wrong. Why? Because there is one fundamental error in it. It says the decision is on the prime minister's desk. That is false. ... This is a decision taken by the industry minister," Harper's chief spokesman Dimitri Soudas told Reuters.

A "yes" ruling is likely to push the takeover process forward while forcing BHP to decide whether to raise its $130-a-share hostile offer for the world's largest fertilizer supplier.

It would also alienate allies of Harper's minority Conservative government after they lobbied the federal government to block the bid.

A spokesman for Clement said the National Post story was factually inaccurate. BHP declined comment.   Continued...

<p>Rocanville Potash Corp underground production supervisor Dave Esslinger displays a sample of potash 1000 metres (3280 feet) below surface at the potash mine in Saskatchewan September 30, 2010. REUTERS/David Stobbe</p>