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BHP prepared to walk away from PotashCorp bid

The CEO of BHP Billiton says he’s prepared to walk away from the global mining giant’s hostile takeover bid for Potash Corp. of Saskatchewan if a rival company comes forward with a higher offer.

The CEO of BHP Billiton says he’s prepared to walk away from the global mining giant’s hostile takeover bid for Potash Corp. of Saskatchewan if a rival company comes forward with a higher offer.

“For us it’s always at the end of the day about shareholder value. If somebody offers a price at which we cannot demonstrate value for our shareholders, we’re probably not going to show,” Marius Kloppers said Tuesday in an interview on the BNN business news channel.

Kloppers has asserted before that the world’s largest miner will not get into a bidding war for PotashCorp. So far the BHP Billiton offer is the “only one on the table” despite reports that Chinese companies, Canadian pension funds and other fertilizer rivals are preparing a white knight bid to top his miner’s US$38.6 billion offer.

The boyish-looking Kloppers, 48, said his main focus is clearing the regulatory hurdles to taking the bid to PotashCorp investors, which include approval by the federal government and regulators.

The CEO of Australia-based BHP Billiton is in Canada this week to promote the bid and meet with federal and provincial officials about the bid, one of the largest ever for a Canadian-based company.

Earlier Tuesday, BHP Billiton said it has extended its takeover offer for PotashCorp by a month after Canadian competition authorities requested more information on the bid.

The Anglo-Australian mining giant said it has pushed back the bid’s expiry date until Nov. 18 from its previous deadline of Oct. 19.

The extension was deemed necessary after the Canadian Competition Bureau said it needed more details on the transaction

The bureau is reviewing whether the hostile bid — if successful — would lessen competition in the Canadian potash sector, a rapidly growing mining industry centred in Saskatchewan.

Potash is a major ingredient in fertilizer and is exported from Canada around the world.

Meanwhile, PotashCorp (TSX:POT) emphasized that the new deadline “does nothing to change the underlying facts” of the proposed deal, which the Canadian company opposes and has been trying to counter by lining up a friendly white knight rival bidder.

“The PotashCorp board of directors is unanimous in its belief that the BHP Billiton offer substantially undervalues PotashCorp and fails to reflect both the value of our premier position in a strategically vital industry and our unparalleled future growth prospects,” the company reiterated in a separate news release Tuesday.

Kloppers met Monday with Saskatchewan government officials, but Premier Brad Wall said he still isn’t persuaded a takeover of Saskatchewan’s biggest company is in the best interests of the province or Canadians.

Ottawa has asked for Wall’s input on the proposal, which it has to review as part of the Investment Canada Act. The act deems that any foreign takeovers of Canadian companies must be of net benefit to Canada.

Kloppers, a chemical engineer who grew up in South Africa, is expected to be in Ottawa on Wednesday.

The rumour mill has been churning ever since BHP first announced its $130-per-share bid for PotashCorp last month, which the company has rejected as “wholly inadequate.”

There has been plenty of speculation that BHP’s offer won’t go unchallenged. State-owned Chinese company Sinochem is considered the most likely bidder to help feed China’s growing demand for the chemical used in fertilizer.

Kloppers emphasized that BHP has a very good relationship with China, where it currently sells about a quarter of its total output.

“We’re well versed in doing business there and we’ve got a very, very good set of relations there,” he said.

BHP is waiting for approval from Canadian and American competition authorities, as well as the federal government, before it asks PotashCorp shareholders to vote on the bid.

BHP Billiton (NYSE:BHP), with a market capitalization of about US$200 billion, has headquarters in Melbourne, Australia and London.

The company, which is active in Canada’s diamond mining industry, has also been expanding its presence in Saskatchewan’s potash hub by buying up several smaller names in the business, including Athabasca Potash Inc. (TSX:API) earlier this year.

PotashCorp is the world’s largest producer of potash with about 20 per cent of the world’s production capacity.

Shares in PotashCorp fell 84 cents to C$151.69 Tuesday afternoon on the Toronto Stock Exchange.