BHP's initial offer was rejected by Canadian industry minister Tony Clement on 4 November on the grounds it was not of "net benefit" to Canada. BHP then had 30 days to make a counter offer, but this morning's announcement by the Melbourne-based mining giant officially closes the door on its bid to diversify into the North American fertiliser market.

"Unfortunately, despite having received all required anti-trust clearances for the offer, we have not been able to obtain clearance under the Investment Canada Act and have accordingly decided to withdraw the Offer," BHP CEO Marius Kloppers said in a statement.

The statement said that for the bid to be successful, the Canadian Government would have required additional undertakings beyond those already offered which would have "conflicted with BHP Billiton's business strategy and been counter to creating shareholder value".

BHP said that if successful, it would have applied to list on the Toronto Stock Exchange.

Kloppers expressed "disappointment" at the outcome, with the company maintaining that its hostile takeover bid, despite being opposed by Potash and senior Canadian political figures, would have resulted in "net benefit" to Canada, Saskatchewan and New Brunswick.

The failed bid represents a triumph for Stikeman Elliot and Jones Day, the two firms that advised Potash.

Brian Hansen, the managing principal and practice coordinator of Stikeman Elliot's Asia-Pacific Group, declined to comment when approached by Lawyers Weekly.

BHP used four firms on the proposed transaction, which was the largest announced M&A deal in 2010 so far.

Blake Dawson, Cleary Gottlieb Steen & Hamilton, Blake Cassels & Graydon and Slaughter & May all provided legal advice to BHP.

BHP is a key client for Blakes, with its current chief legal counsel, David Williamson, a partner with the firm for over 20 years before joining BHP earlier this year.

This is the latest setback in the expansion plans of BHP Billiton, coming two years after it pulled the pin on its approximately $150 billion takeover bid for Rio Tinto.