Despite defeats BHP moves on with growth and acquisitions on its list
After successive setbacks on planned merger and acquisition deals, BHP Billiton Ltd had conceded that absorbing such defeats were wholly difficult for the giant resources firm, which is also regarded as the world's largest mining operator.
BHP Billiton started the week by announcing that its $40 billion takeover bid for Canadian firm Potash Corporation wound not push through following the deal's rejection by both the federal government of Canada and the provincial government of Saskatchewan.
The scrapping followed the collapsed last month of the proposed iron ore joint venture with fellow mining behemoth Rio Tinto Ltd in the Pilbara region of Western Australia amidst protests raised by a number of government regulators across the globe.
BHP chair Jac Nasser has admitted that the deal's meltdown came as a form of defeat for the mining company but more of the regrets rest on the notion that significant value gains for BHP's shareholders were lost when the pursued acquisitions and joint ventures failed to materialise.
Mr Nasser informed BHP shareholders during the company's annual meeting on Tuesday that the quashed deals could have delivered premium value for them and surrendering on the agreements was hard enough for the company, more so in pursuing them without any assurance that targeted values could be achieved.
He stressed that while decisions to retreat were not easy to make, BHP Billiton deemed it necessary "to believe that the potential returns outweighed the risk of not being in the position to proceed," despite investments already poured on the deals.
BHP revealed that a total of $425 million was spent on the twin undertaking, with up to $350 million siphoned out by the Potash Corp bid, which the company said would be regarded as an exceptional item on BHP's interim accounts for the last half of calendar year 2010.
Despite the setbacks and the lost investments, BHP Billiton chief executive Marius Kloppers appeared unfazed by the disappointments recognised by the company chairman as he stressed that BHP may even pursue more mergers and acquisitions in the future.
Analysts agreed that BHP has a vaunted stock to pursue such undertakings as they observed that Mr Kloppers may be training his attention next on energy acquisitions for the company, with Anadarko Petroleum Ltd, Woodside Petroleum Ltd and US-based coal producer Drummond Co as possible targets.
Along with such ambitious blueprint, the BHP chief declared that the company would maintain its presence on Canada as he stressed that "we remain committed to progress the evaluation of our Jansen project and our other development opportunities in Saskatchewan."
Mr Kloppers said that despite the failure of the Potash Corp bid, he remains hopeful that Canada would view BHP Billiton as a trustworthy investment partner for more decades to come.
Also, BHP is espousing an upbeat outlook notwithstanding the modest prospects that so far has been indicated by global economies as Mr Kloppers pointed out that renewed demands from China and India bode well for the products being offered by BHP.
He cited that the recent withdrawals of BHP competitors in the commodities supply network eventually resulted to a favourable supply-demand environment for the leading mining company, thus creating opportunities for further growth.