Province rejects BHP's bid for Potash
By Rod Nickel and Eric Onstad |
October 21, 2010, Thursday
|
Print Edition
Print Edition
CANADA'S Saskatchewan province has opposed BHP Billiton's hostile bid for Potash Corp, prompting the mining giant to offer more concessions on tax revenue to get the US$39 billion deal approved.
Canada's federal officials have the final decision on whether to approve the deal, and some analysts said the tough line taken by Saskatchewan appeared to be part of the negotiating process.
"I think it's wrangling rather than anything more serious. There's a lot that BHP is willing to do in order to ensure that this deal is a success," said analyst Charles Kernot at Evolution Securities in London.
The Canadian province said talks had broken down with BHP after the miner failed to meet its demands.
BHP, the world's biggest mining company, offered Saskatchewan only a fraction of the C$3 billion (US$2.9 billion) over 10 years that the province is seeking to make up for expected revenue losses, the province said in a statement on Tuesday.
Saskatchewan will now give the bid an unfavorable review later this week, a source familiar with the matter said, possibly leading to the Canadian government quashing the deal.
BHP said it was confident about addressing the tax-loss concerns and was working with the Canadian government's Investment Review Division on making additional "significant" undertakings to get a deal across the line before a decision is due on November 3.
Potash's Canadian shares gained 2.1 percent on Tuesday, which some analysts pointed to as evidence that investors still expect BHP to prevail, but with a higher bid, since the shares are about 10 percent above BHP's US$130 per share offer.
Potash has flatly rejected BHP's bid and has repeatedly said it expects other offers, although none have emerged so far.
"BHP Billiton is confident it can address this concern and, in this regard, is prepared to make commitments which go beyond the requirements of prevailing Canadian legislation that should effectively address the tax loss concerns of the province," the miner said in a statement.
BHP spokesman Ruban Yogarajah in London said the group's focus was on the federal review process.
Canada's federal officials have the final decision on whether to approve the deal, and some analysts said the tough line taken by Saskatchewan appeared to be part of the negotiating process.
"I think it's wrangling rather than anything more serious. There's a lot that BHP is willing to do in order to ensure that this deal is a success," said analyst Charles Kernot at Evolution Securities in London.
The Canadian province said talks had broken down with BHP after the miner failed to meet its demands.
BHP, the world's biggest mining company, offered Saskatchewan only a fraction of the C$3 billion (US$2.9 billion) over 10 years that the province is seeking to make up for expected revenue losses, the province said in a statement on Tuesday.
Saskatchewan will now give the bid an unfavorable review later this week, a source familiar with the matter said, possibly leading to the Canadian government quashing the deal.
BHP said it was confident about addressing the tax-loss concerns and was working with the Canadian government's Investment Review Division on making additional "significant" undertakings to get a deal across the line before a decision is due on November 3.
Potash's Canadian shares gained 2.1 percent on Tuesday, which some analysts pointed to as evidence that investors still expect BHP to prevail, but with a higher bid, since the shares are about 10 percent above BHP's US$130 per share offer.
Potash has flatly rejected BHP's bid and has repeatedly said it expects other offers, although none have emerged so far.
"BHP Billiton is confident it can address this concern and, in this regard, is prepared to make commitments which go beyond the requirements of prevailing Canadian legislation that should effectively address the tax loss concerns of the province," the miner said in a statement.
BHP spokesman Ruban Yogarajah in London said the group's focus was on the federal review process.
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