Premier says Australia wouldn't approve of deal

AP News
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Posted: Oct 26, 2010 5:29 PM
Premier says Australia wouldn't approve of deal

Saskatchewan's premier said Tuesday Australia wouldn't approve of Anglo-Australian BHP Billiton's foreign takeover of Potash Corp. _ and Canada shouldn't either.

Premier Brad Wall continued to step up the pressure to make sure Canada's federal government blocks what would be the world's largest takeover this year.

Wall noted that Australia considers whether a proposed investment may result in an investor gaining control over market pricing and production, and said a particular concern to them is the extent to which it would allow an investor to control the global supply of a product.

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 percent of the world's reserves of potash.

"Given the size of this deal Australia would say no," Wall said in an interview with The Associated Press.

Wall said Australia's foreign investment review process spells out some of the very same concerns they have been using to assess BHP's bid.

"So these are hardly the concerns of a 'banana republic' as some have suggested. These are legitimate issues that are considered by Australia's national government and that should be considered by Canada's national government," Wall said.

Australia-based BHP launched a hostile $38.6 billion takeover bid in August for the world's largest fertilizer company after Potash Corp. directors called BHP's $130 a share offer wholly inadequate. Potash, a key fertilizer ingredient, is critical to international food security.

Wall noted Monday that former BHP Billiton Chair Don Argus once warned that too much foreign control of resources in his home country of Australia would turn Australia into a "branch office _ just like Canada."

Canada's federal government can block a foreign takeover if it's not a "net benefit," and Prime Minister Stephen Harper's government has asked for Wall's input.

The federal government is due to announce a decision by Nov. 3 and BHP said it doesn't want the deadline extended. Canada's main opposition parties are against the deal.

Opposition Liberal leader Michael Ignatieff urged the government to reject the deal in Parliament on Tuesday and noted four former leaders of Saskatchewan are against the deal. Government House leader John Baird responded by saying they would block the deal if it's not a net benefit to Canada.

Two Saskatchewan ministers, including Energy and Resources Minister Bill Boyd, met with the federal government on Monday. Wall said the federal government is looking very carefully at the deal and at the position of the provincial government.

Saskatchewan has over half the world's reserves of potash, and Potash Corp. is one of the province's largest revenue-generating companies, accounting for 15 percent of its budget as recently as two years ago. The provincial government collects royalties from the resource.

Andrew Mackenzie, BHP's Chief Executive, Non-Ferrous, has said he's by no means given up on the takeover He said BHP can make Potash Corp. more profitable than the current management and in turn more lucrative for the province. He has said he believes he can bring the province and the federal government to approve of the deal.

But Wall reiterated Tuesday that his stance is not a bargaining position and that BHP can't overcome his concerns about a foreign company controlling more than 25 percent of the world's supply of potash in Canada.

Shares of Potash Corp. traded up $1.85, or 1.3 percent, to $145.55 on the New York Stock Exchange after an analyst upgrade. Bank of America analyst Vincent Andrews increased his price target to $180 from $160 because of increasing prices for corn and potash.