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BHP (BHP) may face some competition for Potash (POT) after all: Canada's Ontario Teachers'...

BHP (BHP) may face some competition for Potash (POT) after all: Canada's Ontario Teachers' Pension Plan is planning a spoiler bid, according to a report in The Sunday Times. OTPP is said to be in talks to partner with Singapore's SWF Temasek on the bid, with Teck Resources (TCK) thought to be involved as well.
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  • bob adamson
    , contributor
    Comments (4562) | Send Message
    BHP has handled its takeover of POT very badly to date. Essentially they have said to the POT shareholders that, given current economic circumstances, they will have no option but to accept the current bid. To the Governments of Canada and Saskatchewan they are saying that the current Canadian potash marketing cartel, Canpotex, will be ended in fact even if not in form thereby denying Saskatchewan billions of dollars of current royalties.


    All this is occurring in the face of recent bad experiences Canadians believe they are experiencing as a result of foreign takeovers of major Canadian base metal corporations.


    The alternative of having a Chinese corporation take over POT engenders anxiety in some quarters in Canada (remember that the Governments of both Saskatchewan and Canada are currently held by Conservative Parties) but this is not to say that Chinese involvement in a supporting role for a group blocking a POT takeover would not be welcomed. In this context it will be noted that a Chinese corporation currently owns about 17% of the common shares of Teck Corp and that Singapore's SWF Temasek has undertaken several projects with Chinese interests in the recent past. The Ontario Teachers' Pension Plan is a major sophisticated investor in the Canadian context and its involvement, together with that of other current Canadian participants in POT, in any new consortium with Teck and SWF Temasek whereby significant Canadian control of future POT management and development is maintained, might be a welcome compromise.


    Whether or not a Teck/Temasek initiative is in the offing, expect
    (a) the search to continue for some third option besides bids for absolute control by BHP or a Chinese sovereign wealth fund or controlled corporation, and
    (b) not green light for either the BHP or Chinese sovereign wealth fund options as currently understood.
    10 Oct 2010, 04:17 PM Reply Like
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