PotashCorp’s home province was ratcheting up pressure on the Canadian government to block BHP Billiton’s hostile approach as the Nov. 3 deadline for a decision drew near.
Saskatchewan, where fertilizer producer PotashCorp is based, wanted Ottawa to reject the Anglo-American mining giant’s $39-billion offer, the largest takeover bid of 2010.
It says a deal would rob Canada of a key strategic resource, as well as cutting jobs, Saskatchewan’s tax take and its royalty payments, and it says the provinces of Alberta, Manitoba, New Brunswick and Quebec also oppose the bid.
Alberta, Manitoba and Saskatchewan alone account for 48 of the 142 seats the ruling Conservatives hold in the House of Commons, and the minority government needs those seats to stay in power.
“How do you overcome the strategic concern? … This is more important going forward for the country than maybe it ever has been because the world is prizing food security and energy security,” Saskatchewan Premier Brad Wall said in Toronto.
“Isn’t it time that we maybe got a little bit circumspect about deals that involve this size of a reserve and this size of a company? I guess that’s our position.”
PotashCorp is the world’s biggest producer of its namesake crop nutrient, demand for which is soaring as food prices climb and demand for fertilizers rise. It has flatly rejected BHP’s $130-a-share offer as inadequate.
The issue of whether to approve the offer has become a huge political challenge for the federal Conservative government, which said it would meet a legal deadline of midnight Nov. 3 to approve or block it.
If the government blocks the bid, it risks damaging Canada’s reputation as a country that’s open to foreign investment.
But accepting it might drive voters in Saskatchewan and in other provinces to other parties, jeopardizing the Conservatives’ chances of staying in power after a federal election widely expected in the first half of 2011.
Speaking to CPAC television, Clement said foreign investment had traditionally been a net benefit to Canada, bringing jobs, competition, innovation and production.
“We can’t close our borders, and nor would we want to, because different companies may want us to export to other countries, or invest in other countries,” he said.
“I think we have to be an open market, but at the same time everybody should know what the rules are. The rules are net benefit to Canada.”
A Saskatchewan Aboriginal group said it saw no net benefit from the BHP proposal, and said the federal government had a duty to consult it. It was not clear if these consultations would take place, or if that could delay any decision.
Polls put the Conservatives just six percentage points in front of the Liberals, their main rivals, and they would lose seats if an election were held now.
The Liberals and the left-wing New Democrats both oppose the BHP offer.
“This is one of the principal nutrients required for food production around the world and will be required for generations to come,” said Ralph Goodale, the Liberals’ only member of parliament in Saskatchewan.
“If one transaction can take that out of Canadian hands forever, that’s a pretty strategic, pretty serious consideration.”
Canadian government approval is far from the final stage in the process, and the Saskatchewan Financial Services Commission is due to hold hearings on Nov. 8 and 9 on whether to overturn Potash shareholder rights plan.
In a filing to the commission, PotashCorp said it had spoken with 15 strategic, financial and state-sponsored potential bidders and investors. But in a tough market, a white knight would need more time to raise financing, it said.
That slightly strengthened a message that the company has beamed out many times already, but at least one leading Canadian investment banker remained skeptical.
“We’re still waiting for them to show up,” said the banker, who asked not to be identified.