Go like the Kloppers

15 November 2010 By John Foley Follow @johnsfoley

The BHP Billiton boss has flunked his third big deal, triggering a $350 mln charge. But the logic behind the mining group’s opportunistic $39 bln bid remains intact, as do the reasons for withdrawing it. By objecting to the offer, Canada has suffered the bigger embarrassment.

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BHP Billiton on Nov. 14 withdrew its $39 billion offer for Potash Corp of Saskatchewan after it was unable to prove the takeover would create a net benefit for Canada. The AngloAustralian miner said it would resume its suspended $13 billion share buyback programme, of which $4.2 billion was still outstanding.

BHP had proposed various measures to increase local employment, guarantee investment and relocate its potash headquarters to Saskatoon, it said in a statement. The miner had also offered to postpone certain tax benefits, and had offered a $250 million "performance bond" to the government.

Canada's Ministry of Industry was likely to require further undertakings that would have conflicted with BHP's strategy and "been counter to creating shareholder value", the statement said. As a result, BHP was unable to secure clearance for the takeover.

BHP plans to take a $350 million charge in December relating to the acquisition, mainly coming from the fees due to banks who had agreed to provide $45 billion of acquisition debt financing.

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