Believing at the moment that ceding control of the world's biggest fertiliser producer to a foreign entity amounts to insufficient net benefit for Canada, its federal government shut the door for now on BHP Billiton Ltd's $US40 billion or $A40.13 billion takeover bid for Potash Corporation of Saskatchewan.

In a statement released on late Thursday, Canadian Industry Minister Tony Clement expressed doubt that the merger proposal would deliver net benefit both for the provincial government of Saskatchewan and the national government of Canada.

The decision to disapprove the acquisition of Potash Corporation by the giant resources firm came as a surprise following speculations this week that the Canadian government was veering towards the approval of the merger despite earlier pronouncements made by the Saskatchewan provincial government last month turning down the takeover bid.

The Canadian government, however, made clear that the decision to thumb down the deal was a painstaking one as Mr Clement emphasised that "I came to this decision after a careful and rigorous review of the proposed transaction."

Still, Canadian authorities gave BHP Billiton at least a month to further its case before the country's federal government, which analysts said were pointing to signs that the deal could still be salvaged though the giant mining company needs to endeavour more in packaging its takeover offer more alluring.

Industry experts knowledgeable on cases of mergers and acquisitions noted that the Canadian government may be dropping hints that BHP Billiton should fatten its offer a little bit more prior to getting a favourable nod from the country's decision makers.

In a Reuters report, portfolio manager Tim Schroeders of Pengana Capital observed that the initial setback suffered by BHP on the much-publicised deal further clouded the realisation of the merger proposal though he added the next 30 days could offer some clues for analysts and a breakthrough could occur before the deadline lapses.

Mr Schroeder told Reuters that the ball is now in the hands of BHP Billiton and their next move could seal the fate of the deal, stressing that "it depends on what the sticking points are and it is difficult to ascertain what BHP is prepared to offer and what the Canadian government is prepared to accept."