Saskatchewan premier says PotashCorp takeover fails 'net benefit' test

Saskatchewan premier Brad Wall is still not convinced BHP Billiton’s US$40 billion takeover of Potash Corp of Saskatchewan will provide “net benefit” to the province, and has recommended to the Canadian government that it reject the deal.

Mr Wall formerly made his recommendation to the federal government on Thursday, saying: “the province of Saskatchewan cannot support the current takeover bid by BHP Billiton”.

According to a statement, the offer failed the “net benefit” test in three key areas: jobs and investment, Canadian control of an important local resource and provincial revenues.

He said: “BHPB’s public statements about Canpotex and about operating at full production create serious concern about the future of Canpotex. This in turn puts C$6 billion worth of capital expansion and thousands of jobs at risk.”

Mr Wall also said a BHPB takeover would mean a significant loss in provincial revenues that are needed for local funding.

“That revenue is also needed to keep our tax levels competitive for other businesses and for Saskatchewan families,” Mr Wall said.

PotashCorp backed Mr Wall’s comments, and again recommended shareholders reject BHP’s hostile offer.

The company said: “Strong demand and an improving pricing environment play to the strengths of PotashCorp, and we believe we are positioned to exceed the expectations of our worldwide customers and deliver compelling value to stakeholders.

“The PotashCorp board believes that the offer is wholly inadequate and is not in the best interests of the company, its shareholders and other stakeholders.”

BHPB is said to be preparing a response to Mr Wall’s decision.