BHP CEO Fails to Win Premier's Support on Potash
22.09.2010 -
BHP Billiton CEO Marius Kloppers visited the home city of Potash on Monday but failed to win the support of the provincial premier for its $39 billion offer to take over the world's largest fertilizer supplier.
Saskatchewan Premier Brad Wall said he still has concerns about BHP's proposal after meeting with Kloppers, who sought to bolster the chances that Canada would approve the bid by winning the province's support.
Wall will advise Canada's federal government on whether it should approve any Potash takeover on the basis of net benefit to the country.
Potash mines produce thousands of jobs and steady royalties for the province from sales of potash, a crop nutrient that China, India and other emerging economies need to feed their growing populations.
"We're going to be very careful and deliberate about this," Wall said. "As of today, I don't see how Saskatchewan is better with this deal, or frankly a subsequent deal."
Later, BHP said it was extending its $130-a-share offer to Nov. 18 from Oct. 19 as it sought to give regulators more time to review its proposal. Wall lacks the power to veto a takeover bid but is widely seen to have close connections with the federal government of Prime Minister Stephen Harper.
Saskatchewan's chief concern is BHP's preference to market its commodities independently, rather than through the Canpotex consortium, which sells the province's potash in foreign markets. The provincial government fears such a move would drive down prices, and thus the royalties that Saskatchewan derives from potash sales.
Wall said BHP's chief executive repeated his past position on Canpotex during their meeting. Earlier in the day, Kloppers told reporters at the ceremonial opening of BHP's office in Saskatoon that BHP prefers to market its own products but "nothing is static forever."
BHP "had a same consistent message that they've had publicly so we have the same concerns with respect to Canpotex and its future," Wall said. "We think it serves our industry and the province and the jobs it supports very well."
Kloppers said he will meet with Canadian politicians this week as he seeks to build support for his move on Potash. As of Monday, there was no meeting scheduled with federal Industry Minister Tony Clement, who will review the takeover bid personally, the minister said.
Kloppers said the Anglo-Australian miner has no intention of changing its $130-a-share takeover offer for Potash, the world's biggest fertilizer producer. At $39 billion, the offer's value is the highest in any industry this year.
The BHP CEO brushed aside reports that China, through its state-owned companies, is attempting to assemble a rival bid. "We have no plans to change what is currently the only offer on the table," Kloppers said. "I've seen a lot of speculation and rumors (about a China-backed offer) but the reality is there is only one cash bid on the table and that's ours at the moment."
China's Sinochem has formally asked Beijing to back a bid for Potash, a newspaper reported on Sunday.