Date Published: 
11/04/2010

The BHP Billiton hostile takeover of Potash Corp was rejected by the Industry Minister, with potash being identified as a "strategic asset". 

The rejection was at least partly politically motivated - in that the Saskatchewan Premier lobbied extensively against the deal.  A key point seemed to be BHP's lack of respect for an existing potash marketing arrangement and cartel called CANPOTEX, which leads to a substantial provincial revenues.  Gutting that arrangement, about which BHP seemed at best indifferent, would have cost the province dearly. 

After the rejection, BHP had 30 days to revise its offer, which it did not do. Discussions with Federal officials apparently led it to believe there was no appealing outcome from amending its offer. 

Subsequently, the Government has announced it will further clarify the rules. 

Risk Management Perspective: 

Political Risk - especially in senstive mega-deals, it's very important to identify the key stakeholders and be sure one knows what conditions need to be part of the deal to satisfy them.

Industry Group: 
Crown Corporations and Government Agencies
Industry: 
Mining
Country: 
Canada
Risk Class: 
Strategic
Risk Type: 
Mergers/Acquisitions/Divestitures
Risk Type: 
Political
Risk Type: 
Regulatory

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