Canada Rejects BHP's Potash Bid

In a stunning turn of events, Canada's government followed the lead of Saskatchewan's provincial authorities and has rejected BHP Billiton's BHP $38.6 billion hostile takeover offer for Potah Corp. POT, the world's largest fertilizer producer. Industry Minister Tony Clement has given BHP, the world's largest mining company, 30 days to come up with another proposal that may be more attractive. That extension is per Canadian government protocol. BHP expressed disappointment that its bid, which was launched in August, was rejected. CEO Marius Kloppers has now failed in his efforts to acquire Potash and launch a major iron venture with rival with Rio Tinto RTP in a matter of weeks. BHP offered $130-per-share for Potash, but never raised its offer despite the fact that Potash shares have consistently traded above that level. The Anglo-Australian mining likely leveraged the fact that Potash received no other offers. Investors are now speculating that Potash may repurchase shares in order to return value to shareholders in the near- to medium-term. Under the Investment Canada Act, a foreign takeover must have a net benefit for the country in terms of jobs, exports, production and investment, according to Reuters. Though this is only the second time Canada has blocked a major takeover by a foreign company, concerns could arise that Canada's markets are not open to foreign investors. Analysts had speculated that Ottawa was reluctant to let Potash fall into foreign hands from the time BHP made its offer. BHP launched its offer for Potash Corp as population and income growth in developing countries like China and India create a bullish long-term outlook for fertilizer and food production, Reuters reported.