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BHP Billiton vs. Potash Corp (Case Study Sample)

Hi, I have this case study from my day school course international business. My teacher wants me to find an article that is about the Potash Corp Case. (the australian company tries to take over the canadian potash corp, but was rejected by the canadian government) Here are the instructions and the questions that my teacher has given me to answer: After months of negotiations, the Government of Canada rejected the takeover offer from Australian mining company BHP Billiton. 1. Do you think this was a good decision for Canada? Why or why not? 2. Do you think this will send a message to foreign investors that Canada is "not open for business?" 3. Why do you think the BHP Billiton bid would not provide a "net benefit" to Canadians." Your response should: Clearly communicate your position Provide strong evidence from credible source Use appropriate course terminology and I really need this piece tomorrow, because all of my peers have finished it long time ago. and here is one of the example, but do not, I repeat, do not copy this one, or just simply change the words, this is just giving u a gerneral idea of what this is like. Canada¡¯s most significant reserve of potash can be found in Saskatchewan where it is under the control of the Potash Corporation of Saskatchewan. In August, 2010, the Australian corporation of BHP Billiton made a $39 billion offer to buy Potash Corp. In response to this, Potash Corp¡¯s directors rejected the offer and put a poison pill in place to fend off BHP. Many thought that this original offer was not high enough, that it should be closer to $160 per share as opposed to the $130 offered. BHP planned to jump to the top of the recovering fertilizer industry with this offer (the largest in any industry that year) after it suffered in the global economic crisis. Potash used to be over $1000 per metric ton during the commodity boom of 2007/2008, but fell to approximately $350-$375 a metric ton. It was however to begin to increase in demand as the income levels in China, India, and other emerging economies begin to rise thanks to their population growth accelerating. As a country, we are leaders of the industry with some of the highest numbers when it comes to exporting the mineral in the world, so we need to protect this resource. I believe that Canada made the right choice of declining the offer, as it would not be in the country¡¯s interest for the future. The Saskatchewan government did a study that showed provincial revenue losses over the next decade, due to the fact that they currently produce 30 per cent of the world¡¯s potash. Potash is also an element that is growing in demand, and Canada would be giving up an opportunity on an increasing market. As the control was then given to an Australian corporation, many operations would be moved overseas and hundreds of jobs would be lost in Canada which would not be helpful as we attempt to pull ourselves from the depression everyone has found themselves in. And even though a deal was not made, Potash Corp shares in New York did soar, at one point (August 17th, 2010) a 28 percent record increase was recorded while BHP London shares dropped a small amount. Canada¡¯s decision will not send the message of being not open for business . Other foreign investors will understand that the offer was not suitable for Canada, not that they aren¡¯t willing to make deals with others. Only 2 bids have been rejected since 1985, showing that Canada has a history of accepting the offers, not of refusing them. This one incident won¡¯t hurt our chances for foreign investment especially with Tony Clement¡¯s We welcome foreign investment for all the benefits it brings, including new ideas, sources of capital, and job creation. This statement alone, by the Federal Industry Minister should put any questions to rest. BHP Billiton would not provide net benefit to Canadians due to the loss of provincial revenue that is predicted, it would not create jobs in the country (jobs would likely be lost actually), or do anything to further our economy. There is no real benefit from accepting this deal, except for a strong relationship with Australia. This isn¡¯t a factor however that should have a lot of impact on the decision in my opinion however. So yes, I believe that Canada¡¯s choice in refusing BHP Billiton¡¯s offer was the smart move for our country and will do nothing to hurt our economy or operations of foreign investments. Here are some of the articles that are related to this case: http://www(dot)cbc(dot)ca/thenational/indepthanalysis/story/2010/11/03/national-potashcorp.html http://www(dot)theglobeandmail(dot)com/commentary/why-harper-will-deny-the-potash-takeover-bid/article4330716/ http://www(dot)citytv(dot)com/toronto/citynews/news/national/article/98934 http://www2(dot)macleans(dot)ca/2010/08/18/bhp-launches-hostile-takeover-bid-of-potash-corp/ source..
Date of Submission:
BHP Billiton vs. Potash Corp
On 18th August, 2010, reported BHP Billiton’s USD 40 billion aggressive takeover offer against Canada’s Potash Corp. Flash forward to 14th November , the same year BHP Billiton withdrew the multi-billion dollar takeover bid after the Canadian administration ruled out this purchase terming it “ wholly inadequate” and an offer that “ substantially undervalues” the company. I concur with this ruling but before explaining my position, it would be best for me to introduce these two companies.
BHP Billiton is the goliath mining company located in Melbourne, Australia with its business roots spreading all over the world. Potash Corp., located at Saskatchewan, Canada is an equivalent of BHP Billiton, only that it deals in Potash production. This acquisition process by BHP Billiton over Potash came as a result of the anticipated increase in demand for fertilizer due to the growing meat consumption rate in upcoming markets. BHP Billiton had earlier stated its interest in the Potash industry, where acquiring Potash Corp. would catapult its dealings making it a leading worldwide Potash miner (Maclean, 2010).
Asked whether this was a wise move on Canada’s end, I would say affirmative like Saskatchewan premier’s Brad wall who said that Canada had exhibited that she would protect her natural resources at all costs. This is because the offer did not reflect the worth of Potash Corp’s foremost position in this critical trade as well as the corporate development vision. As far as Canada’s law is concerned, she could accept the alien acquisition of Potash Corp. of Saskatchewan but looking at this politically; the government could not and would not approve...
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