TORONTO - If BHP Billiton is unable to overcome Ottawa's rejection of its US$38.6-billion takeover bid for PotashCorp, it will be the third time in recent years that the world's biggest miner has failed to complete a strategic deal.
In February 2008, as the world was bidding up the price of all sorts of commodities, BHP tried to merge with Rio Tinto PLC, another dual-citizenship mining giant with headquarters in both London and and Melbourne.
But BHP was forced to abandon the hostile bid six months later in November 2008, as the global economy was being turned upside down by the Wall Street financial collapse and credit crunch in the United States and Europe.
And as recently as last month — while the PotashCorp saga was playing out in Canada — Rio Tinto and BHP （NYSE:BHP） scrapped plans for a US$120-billion iron ore joint venture amid opposition from antitrust regulators in Australia, Europe and Asia.
"The large synergies from combining our West Australian iron ore assets with Rio Tinto's have caused us to persevere in seeking to obtain regulatory approvals,'' BHP chief executives Marius Kloppers said at the time in a statement.
"However, it has become clear that this transaction is unlikely to obtain the necessary approvals to allow the deal to close and as a result both parties have reluctantly agreed to terminate the agreement."
Since the company's creation in 2001 from the merger of Australia's Broken Hill Proprietary Co. and the Anglo-Dutch Billiton plc, the giant miner has tried to cash in on the growing demand for resources from China, its key growth market.
The company produces, iron ore, oil and gas, diamonds, coal, manganese, aluminum, copper, nickel, gold and silver and uranium, with most of its operations in Australia, one of China's most important suppliers of commodities.
BHP Billiton decided to enter the potash business about seven years ago and believes that sector has explosive growth potential in the coming decades because of soaring demand from Chinese farmers for fertilizers to boost crop yields.
That's why BHP Billiton launched its hostile bid for PotashCorp, the world's largest fertilizer producer, and was prepared to pay the biggest takeover price ever for a Canadian company.
So far, BHP hasn't given up on the Saskatchewan company （TSX:POT） — even though Industry Minister Tony Clement has rejected the deal as failing to provide a net benefit to Canada amid a high-profile campaign by Saskatchewan Premier Brad Wall against the deal.
BHP gets until Dec. 3 to respond to Clement's decision and the company said Thursday that it will "continue to co-operate with the minister and the Investment Review Division of Industry Canada and will review its options."
It's only the second time in a quarter century that Ottawa has used the Investment Canada act to block a major foreign corporate purchase, on the basis that it didn't provide a "net benefit" to the country.
Clement has said he's eager to explain his reasons for denying the deal as its stands, but can't do so until the review period is over.
Kloppers certainly knew his company had to tread carefully while seeking the necessary approvals from government authorities, even though it's unusual for Canada to block a mining takeover.
"Resources are always a sensitive matter. You extract them from an endowment in somebody's back yard and it's normally an emotional debate, no different in Australia where I currently live than here in Canada," Kloppers said in a Sept. 21 interview on BNN, the business news cable channel.
He made the comments while on a Canadian visit to meet with Saskatchewan and federal politicians in hopes of shoring up their support for the deal.
Among other things, Kloppers pointed to BHP's good corporate citizenship during 40 years of activity in Canada — including the Ekati diamond mine in the Far North — promised full employment for PotashCorp mining employees in Saskatchewan and made some attempts to deal with the province's concerns about losing revenue over the long term if PotashCorp were taken over by BHP.
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