Canada Blocks BHP's Potash Bid

Canada blocked BHP Billiton's BHP ( $39 billion bid for Potash Corp POT and left little room for a modified offer, throwing the spotlight on how the world's largest miner can find new avenues for growth. Canada said the deal would not benefit the country, delivering a major blow to BHP Chief Executive Marius Kloppers after the 2008 failure of a $120-billion-plus bid for rival Rio Tinto and the collapse of a $116-billion iron ore joint venture with Rio earlier this year. BHP investors are betting the Anglo-Australian miner will now return capital through a share buyback or expand its interest in oil and gas to put its growing cash pile to work. While Canada gave BHP 30 days to come up with additional proposals that might make its hostile bid for the world's largest fertilizer producer more palatable, the chances of a successful modified offer appeared remote. "Marius Kloppers is going to be pretty frustrated. BHP is of a size now where just about anything it wants to do of any substance is going to get blocked on regulatory grounds," said Cameron Peacock, market analyst at IG Markets in Melbourne. POTASH INVESTORS ANGRY The move left some investors in Potash fuming after many had piled into the shares expecting a sweetened bid. "We are quite angry because the decision will probably prevent us from unlocking the value (in Potash Corp)," said Lionel Melka, a portfolio manager with hedge fund Bernheim Dreyfus in Paris. "This is purely a political decision, it is pure protectionism." Potash Corp shares, which had been trading about 12% above BHP's $130 per share bid, fell about 5% in after-the-bell trade. BHP shares in London shot up 5.8% to the highest levels at least since the merged company was created in 2001 on expectations BHP would consider returning capital to shareholders. They were 4.9% firmer at 1042 GMT. Continue reading the article.