BHPB withdraws Potash Corp offer, launches fresh buy-back

BHP Billiton has withdrawn from its hostile US$42 billion bid to acquire Potash Corporation of Saskatchewan Inc after failing to win approval from Canada’s Minister of Industry.

At the same time the company has initiated a US$4.2 billion share buy-back programme, the remaining portion on a previously suspended US$13 billion programme.

BHPB chairman Jac Nasser said: “The decision to reactivate the buy-back programme is entirely consistent with our commitment to maintain an appropriate capital structure while we continue to make substantial investments in our growth projects.”

Canada’s minister for industry Tony Clement confirmed on November 3 that he wasn’t satisfied that the proposed transaction was likely to be of net benefit to the country. He said the decision had been made after “a careful and rigorous” review, and that he would provide BHPB with another 30 days to make any additional representations. BHP's cash offer was set to expire on November 18.

Since then, speculation in the market was that BHPB would drop its pursuit of the company and reinitiate buy-backs. The company will take a charge of US$350 million, of which US$250 million relates to the US$45 billion financing facility surrounding the deal. The offer was first launched on August 18.

BHPB’s chief executive, Marius Kloppers said: “Unfortunately, despite having received all required anti-trust clearances for the offer, we have not been able to obtain clearance under the Investment Canada Act and have accordingly decided to withdraw the offer.”