Geoff Howe
As with goods and services, so it is with investments - in general, free exchange across borders is mutually beneficial. Just as Canadian corporations can and do buy firms in other countries, foreign corporations, such as BHP Billiton Ltd., should be welcome to make offers to buy Canadian ones, such as Potash Corp. of Saskatchewan Inc., and government intervention should be the exception.
Even so, Potash Corp. is entirely viable as it stands, and its shareholders may well see fit to refuse BHP's offer, though, considering the modest dividend the company pays, many of them will be tempted to take advantage of the share-price rise that the bid has begotten, rather than wait for the future growth and the larger capital gains that the present management confidently predicts.
Investment Canada has reportedly applied its particular criteria, and found that a purchase by BHP, subject to various conditions, would be of net benefit to Canada; Prime Minister Stephen Harper and Tony Clement, the Minister of Industry, should make their decision accordingly. Moreover, in a hearing next week, the Financial Services Commission of Saskatchewan should not uphold the poison pill that Potash Corp.'s management has instituted to issue new shares, in order to make the BHP bid more difficult.
The objectors to permitting such a sale should bear a heavy burden of proof. It is not enough to assert that Saskatchewan's potash deposits - the province's property, come what may - are a strategic resource; they are of great value in themselves, but the presence of Potash Corp. has not energized a whole regional economy or begotten numerous new firms (or "spillover effects") in its sphere of influence.
The Canadianness of Potash Corp. does not go without saying. Control is a question of practical reality, not of any arithmetical formula. Potash Corp. is not dominated by a control group of Canadian shareholders. Since its privatization, the firm has been led by Americans - for several years from Chicago.
Some other developed countries have stood in the way of certain foreign acquisitions, but that has not prevented Canadian corporations from buying proportionately more foreign firms than foreign corporations buy Canadian ones. Many Canadians remember their country as a target for takeovers, but for a decade and a half, Canada has been a net exporter of capital, more an investor than an investee.
Anglo-Dutch-Australian economic imperialism as embodied in BHP Billiton should rank near the bottom among the fears of Canadians. As a rule, a willing buyer should be allowed to do business with willing sellers.