Saskatchewan’s premier said on Friday that BHP Billiton “can’t overcome” his concerns about a foreign takeover of Potash Corp and he asserted Canada’s prime minister made a mistake when he called the company American-controlled.
Saskatchewan Premier Brad Wall made the remarks to The Associated Press after publicly rejecting the bid on Thursday.
Andrew Mackenzie, Anglo-Australian BHP Billiton’s chief executive, non-ferrous, said on Thursday he remained confident he can win over the province.
But Wall said it just isn’t in the strategic interest of Canada to allow a foreign takeover of a company that controls more than 25 per cent of the world’s reserves of potash.
“You can’t overcome that,” Wall said in an interview in his office.
BHP Billiton launched a hostile $38.6 billion takeover bid in August for the world’s largest fertiliser company after Potash Corp directors called BHP’s $130 a share offer wholly inadequate.
Potash, a key fertiliser ingredient, is critical to international food security.
Canada’s federal government can block a foreign takeover if it’s not a “net benefit” to Canada, and Prime Minister Stephen Harper government had asked for Wall’s input.
Harper was at odds with Wall this week when he described the deal in Parliament as a “proposal for an American-controlled company to be taken over by an Australian-controlled company.”
Potash Corp’s headquarters is listed as being in Saskatchewan but the chief executive and many top executives are American and live and work in the Chicago area.
Wall said Harper just made a mistake.
“I’ve been in question period and made mistakes before and he made a mistake because it’s factually an error,” said Wall, adding that eight of the 12 board members are Canadian and that 38 per cent of the shares are controlled by Americans.
“It is a Canadian company.”
But Sara MacIntyre, a spokeswoman for Harper, said the prime minister wasn’t mistaken.
“The company is headquartered in Northbrook, Illinois, and the prime minister was referring to the fact that Canadian shareholders don’t own a majority of Potash Corp. and the misconception that the company is still owned by the Saskatchewan province,” MacIntyre said.
By saying the corporate headquarters are in the US, the Harper government appears to be signalling that the company isn’t in need of protection from a foreign takeover.
Wall called it a tough decision to reject the bid but noted Australia blocked Shell’s attempted acquisition of Australian oil fields in 2001.
The premier said Saskatchewan is still open to foreign investment and said a mass email was sent out on Thursday to companies and associations making it clear that nothing has changed in their growth agenda.
Wall disputes the notion he made the decision because of Saskatchewan’s reputation as Canada’s most left-of-centre province.
“Don’t compare us to the 1970s, compare us to 2001 in Australia, compare us to decisions America has made in their strategic interests,” Wall said.
Wall said other countries would laugh the bid off the table.
The federal government is due to announce a decision by November 3. Canada’s main opposition parties are against the deal.
Canadian opposition lawmaker Ralph Goodale, who represents a Saskatchewan district in Ottawa, has said he’d be shocked if the federal government didn’t support the province.
BHP Billiton, the world’s largest mining company, is hoping to profit from what it expects will be rising fertiliser demand in China and India.
As the world’s population grows, more food is needed and more fertiliser to grow crops. Demand for potash, a potassium compound also used in industry, is getting a boost from rising demand from emerging giants China and India – the main markets for potash, along with the US and Brazil.
Shares of Potash Corp. closed down 91 cents, or 1.3 per cent, to $141.79 on the New York Stock Exchange. Potash shares had soared to more than $230 just before the global recession hit in 2008.
Potash Corp is a former government-owned company that was created after the government nationalised many smaller US potash companies based in Saskatchewan. The provincial government later privatised the company.