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Clement expected to make decision on BHP hostile bid for PotashCorp

It's decision day for Industry Minister Tony Clement.

The minister is expected to announce his decision Wednesday whether or not to allow a hostile takeover of Potash Corp. of Saskatchewan by Anglo-Australian company BHP Billiton.

Clement must rule if the takeover would be a net benefit to the country or not.

Reports said the Clement announcement will come after markets close Wednesday.

Saskatchewan Premier Brad Wall has urged the federal government to block the deal saying Investment Canada's track record isn't very good when it comes to inspecting promises made by foreign companies in takeovers.

Wall has also raised the possibility of a legal challenge if Ottawa allows the deal to go ahead.

BHP unsuccessfully attempted to woo Saskatchewan, saying that it would make the province the headquarters of its global potash operations and ensure the provincial government coffers aren't hurt by the takeover.

BHP has offered US$130 per share or nearly $40 billion for the Canadian company in what would be the biggest takeover in Canadian history.

Potash shares closed down $2.43 at $146.27 on the Toronto Stock Exchange on Tuesday, but still well above the offer price — suggesting the story is far from over even if Ottawa approves the deal and either BHP could be forced to sweeten its bid or a new prospective buyer could yet come forward.

The federal government has come under fire for its handling of recent foreign acquisitions. Brazilian mining giant Vale's takeover of the former Inco in 2006 was criticized during a year-long strike involving the company's operations in Sudbury, Ont. Vale employees in Voisey's Bay, N.L., are still on strike.

And Ottawa is in the midst of a lengthy court case with U.S. Steel Corp. (NYSE:X), which acquired the former Stelco in 2007. U.S. Steel admits it broke employment and production promises it made under the Investment Canada Act, but says it had no choice because of the global recession.

Under the Investment Canada Act, the federal government must make its decisions based on whether the foreign takeover would bring a "net benefit" to the country.

Ottawa blocked an attempt by MacDonald, Dettwiler and Associates Ltd. (TSX:MDA) to sell its space division to U.S. defence firm Alliant Techsystems Inc. in 2008, the first and only time the federal government rejected a foreign takeover outright under the act.

Potash Corp. of Saskatchewan (TSX:POT) is the world's biggest producer of potash, a key component used in fertilizer.

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