Canada insists no decision yet on BHP's Potash bid

Tue Nov 2, 2010 5:21pm EDT
 
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By Euan Rocha and David Ljunggren

TORONTO/OTTAWA (Reuters) - Canada insisted on Tuesday it has made no decision yet on BHP's $39 billion offer for Potash Corp, even as two newspapers said bureaucrats were advising the government to allow the bid and rumors swirled in the markets that Ottawa would block it.

The federal government will announce its decision on Wednesday, a source close to the matter told Reuters. Ottawa has until the end of Wednesday (0400 GMT Nov 4) to make its ruling public.

Potash Corp shares closed down 1.1 percent in New York, while BHP Billiton's shares closed nearly 2 percent higher in London on speculation that Canada would block a takeover of the No.1 fertilizer maker or impose tough conditions that would scupper the bid.

Industry Minister Tony Clement in an e-mailed statement on Tuesday denied that officials of Investment Canada -- part of his ministry -- had already recommended that the government let the Anglo-Australian miner's hostile bid proceed, against the advice of Saskatchewan, Potash Corp's home province.

"I am currently reviewing the facts of the case. As of yet no decision has been made, and no decision or recommendation has been communicated to the investor," he said, referring to BHP.

By law, Ottawa must review takeovers by foreign companies to assure they would have a net benefit for Canada.

A "yes" from Ottawa will likely prolong the takeover battle and it may well force BHP to raise its bid. Potash Corp has flatly rejected the current $130-a-share offer as inadequate.

Potash Corp's shares are expected to fall if the government opts to veto a takeover, as arbitrage traders will dump the stock. But analysts say the shares will likely rebound quickly given the recent strengthening of global agricultural markets.   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>