Industry Minister Tony Clement’s decision to reject BHP’s $38.9 billion hostile bid for Saskatoon-based Potash Corp. is reverberating through the business world, with some calling it a wise political move and others dismissing it as idiotic.
Clement announced on Wednesday that the proposed takeover—which would be one of the largest in Canadian history—would not be a net benefit to the country and gave the company a month to come back with a better proposal. However, is unclear where BHP can go from here as the company is now so large that it faces regulatory hurdles wherever it goes.
Saskatchewan Premiere Brad Wall spearheaded a national campaign to oppose the deal on grounds that Potash Corp.’s scale—it owns about one-third of known world reserves of potash, a key ingredient in fertilizer—made it a national strategic asset that should be kept in Canadian hands. His message found traction in Western Canada and threatened to become a political issue for Prime Minister Stephen Harper, who is likely facing an election in 2011.
Potash investors—many of whom increased their holdings in anticipation of the deal—are angry at what they see as a politically driven decision trumping good business sense.