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BHP Billiton admits defeat, to return funds

BHP Billiton has withdrawn its $US40 billion bid to take over Canada's Potash Corp of Saskatchewan and will return funds to shareholders as a result.BHP, the world's biggest miner, had its bid for Potash knocked back by the Canadian government early this

Jamie Gray
Mon, 15 Nov 2010

BHP Billiton has withdrawn its $US40 billion bid to take over Canada’s Potash Corp of Saskatchewan and will return funds to shareholders as a result.

BHP, the world’s biggest miner, had its bid for Potash knocked back by the Canadian government early this month but was given 30 days to appeal,

The company said its failure to take over Potash will cost it about $US350 million, of which about $US250 million will be related to a US$45 billion financing facility arranged specifically for the bid.

Costs arising from the failed transaction will be recognised as an exceptional item in BHP’s interim results.

Saskatchewan has the world’s largest reserves of potash, a form of potassium farmers use to boost crop yields. Potash Corp is the world’s largest maker of potash by capacity.

“BHP continues to believe its offer would have resulted in a significant net benefit to Canada, Saskatchewan and New Brunswick,” chief executive Marius Kloppers said in a statement.

Mr Kloppers said BHP would invest US$15 billion in its global business this financial year.

BHP, which has 14,000 New Zealand shareholders, said it will reactivate the remaining US$4.2 billion component of its previously suspended US$13.0 billion buy-back programme.

From 2005, BHP Billiton has completed buy-backs totalling $US12.7 billion or 11% of its issued capital, and has also paid out $US17.9 billion in dividends.

BHP’s experience with Potash represents its third major failure on the acquisition front in two years.

Last month, the company’s plans to tie up with Rio Tinto in Western Australia, fell through, due to mounting pressure from the world’s anti-monopoly regulators.
This followed an unsuccessful takeover bid for Rio in 2008.

BHP’s share price was underwhelmed by the announcement, rising just 6Ac to $A44.36.

 

 

Jamie Gray
Mon, 15 Nov 2010
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BHP Billiton admits defeat, to return funds
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