Australian miner BHP Billiton Ltd. says it is not ready to give up on its takeover of Potash Corp.
Shortly after Industry Minister Tony Clement said Wednesday he was not satisfied the bid "is likely to be of net benefit to Canada," BHP said it would be willing to improve the deal's economic gains for Canada to win the federal government's approval.
Ottawa is giving BHP another 30 days to prove its case before making a final decision.
BHP said it was "disappointed" with the decision, but vowed to keep talking to the federal government before a final decision must be made next month.
"We are prepared to make substantial undertakings on which we are willing to be held to account," said a BHP spokesman. That could include making further promises to government, he said, without providing specifics.
BHP is considered to have offered more in its takeover bid than many other foreign buyers in the past. The company said it would create a net benefit to the country through new investment, the relocation of head office jobs to Saskatoon from Chicago, and by structuring its deal to protect billions of dollars worth of provincial revenues expected to be lost if it buys Potash Corp.
BHP has also vowed to make its commitments public if the deal is done, as well as to set up independent monitoring and enforcement mechanisms to ensure it doesn't break those promises.
Those promises were not enough for the province of Saskatchewan, which urged Ottawa to reject the bid and not hand over a strategic resource to a foreign buyer. Premier Brad Wall said an approval would be a "betrayal" of Saskatchewan people, and also threatened to pick a legal battle with Ottawa if it was approved.
On Wednesday, BHP said it "will review its options" on its proposed takeover after Ottawa's announcement. BHP's bid expires on Nov. 18.
The company said Wednesday it will be required to extend the offer "to meet the requirements of the Investment Canada Process."
Potash Corp, which has rejected BHP's $130 per share offer as too low, said Ottawa's decision doesn't change that view and its belief the offer doesn't reflect the company's growth prospects and "premier position in a strategically vital industry."
Potash Corp. said it has been in discussions with other potential bidders to try to trump BHP's offer. So far, no alternative offers have been tabled. The company said recently it needs more time for those alternative options to be considered given the size and location of its assets and the political uncertainty.
Ottawa's initial rejection of BHP's bid is expected to scare off any potential foreign bidders that may have been considering a transaction.
Ottawa's decision is also a blow for the company, and in particular its CEO Marius Kloppers, who has been trying to buy Potash Corp. for at least a year before he took the top job in late 2007. It is also the third major deal Mr. Kloppers, 48, has had fall apart under his leadership.
Shortly after taking the CEO job he launched a blockbuster $66-billion (U.S.) bid to buy Rio Tinto plc, but walked away a year later, citing the economic impact of global financial crisis.
Earlier this month, he pulled BHP away from a iron ore joint venture with Rio in Western Australia after global regulators expressed competition concerns.
If BHP's bid for Potash Corp. officially fails, there is also a question of whether it will go ahead with plans to develop its Jansen potash project in Saskatchewan, set to begin production in 2015.
BHP opened a new head office in Saskatoon last month, which it said will be home to its global potash headquarters, no matter the outcome of its bid for Potash Corp.
However, documents filed in an ongoing legal battle between BHP and Potash Corp. show the Australian miner will not make a final decision on whether to go ahead with Jansen until 2011.
"We continue to progress the project," a BHP spokesman said Wednesday.