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Blakes loses out in BHP bid rejection

Blakes loses out in BHP bid rejection

The Canadian Government's decision to block BHP Billiton's US$39 billion ($38.8 billion) bid for Saskatchewan's Potash Corp is a major setback for Blake Dawson.Blake Dawson was one of four firms…

The Canadian Government's decision to block BHP Billiton's US$39 billion ($38.8 billion) bid for Saskatchewan's Potash Corp is a major setback for Blake Dawson.

Blake Dawson was one of four firms to provide legal services to BHP in its failed attempt to get the deal approved by various Canadian regulatory bodies. When contacted by Lawyers Weekly, Blake Dawson refused to comment on what aspects of the transaction it was involved in, and which lawyers were advising. Blake Dawson was the only one of the seven firms with a major role in the transaction that did not publicly make available which partners were involved.

Legal services were also provided by the American-based Cleary Gottlieb Steen & Hamilton, with noted New York based M&A partner Victor Lewkow, who worked alongside Canada's Blake Cassel & Grayson as the two main firms BHP used in its failed attempt to get the deal approved by various Canadian regulatory bodies. Slaughter & May assisted with the English law aspects of the transaction.

Canada's industry minister Tony Clement announced this morning (4 November) that the Canadian government had rejected the bid because he was not satisfied the transaction would be of "net benefit" to Canada.

The rejection of the BHP offer for the Canadian fertiliser manufacturer comes following much controversy, with Canadian Prime Minister Stephen Harper announcing in September that the takeover would only be approved if it was of "net benefit".

Potash filed a lawsuit in late September claiming that BHP attempted to depress Potash's share price, and that the Australian company's offering was "grossly inadequate".

The premier of Saskatchewan, Brad Wall, has previously stated that if BHP's bid was successful, it would be a "betrayal of our province and its people".

The land-locked Canadian province, which shares a border with Montana and North Dakota, could have lost more than $2 billion in taxation revenue if the deal went ahead.

Under Canadian legislation, BHP has 30 days to make any additional representations and undertakings.

Canada's Opposition leader, Michael Ignatieff, has said the government should have given a firm "no" on the deal, and not left the door ajar for BHP to make an alternative offer in 30 days.

The Canadian media has also reported that the Russian fertiliser company Phosagro could make a bid as a "white knight" defence to BHP's offer.

Canadian firm Stikeman Elliot and Jones Day acted as counsel for Potash.

Stikeman Elliot has been Potash's commercial firm of choice for a number of years, and it has at least four partners from its Canadian offices involved. Jones Day is also acting for Potash, with at least six partners from offices in Chicago, Cleveland, Washington and New York advising.

Allen & Overy acted for six banks that provided BHP with a $45 billion loan for the transaction including the Royal Bank of Scotland, Banco Santander, Barclay Capital, BNP Paribas, JP Morgan and TD Securities.

Sydney-based banking and finance partner Chris Robertson worked with four other partners from the international firm on the financing aspects of the deal.

Robertson told Lawyers Weekly yesterday that he was able to have a role on the proposed transaction due to the banking connections he had established previously as a partner at Freehills (Robertson joined Allen & Overy early this year), and from existing connections the firm had with the banks - notably, the Royal Bank of Scotland.

"I first came on board this transaction in the first half of this year," Robertson said. "Things are a little quiet on our front at the moment, but if the deal gets the various regulatory approvals, it will certainly come to life from our end."

The other partners involved from the firm are based in London and New York.

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Blakes loses out in BHP bid rejection
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