BHP is still open to partnering with Nutrien Ltd. and is not ruling out another takeover attempt, according to a Globe & Mail interview with Ragner Udd, BHP President, Minerals America. Pressed further as to what kind of deal might occur, he said the company is looking at a “myriad of options.”
While the Canadian government rejected BHP’s $40 billion attempt to buy Nutrien legacy company Potash Corp. of Saskatchewan in 2010 (GM Nov. 22, 2010), speculation that some sort of deal might occur between the companies has persisted since that time.
Just last year, speculation arose again after BHP expanded its deal-making team and went into merger and acquisition mode (GM Jan. 2, 2022). In 2021, as BHP got closer to a final decision on whether to proceed on the Jansen mine, which it opted to do in August (GM Aug. 20, 2021), much of the speculation was that BHP would partner with Nutrien on Jansen (GM May 28, June 25, 2021). Takeover talk was also present in 2016 (GM July 1, 2016) and 2014 (GM April 21, 2014).
Analysts have noted that much has changed since 2010. BHP has improved relations with Canada and has made major investments in the country, including $5.7 billion in the Jansen mine. Former Canadian Industry Minister Tony Clement, who rejected the 2010 merger, has said it would be more likely today, as the focus is not on large deals and their impact, but on national security issues, noting that Australia is an ally and not an aggressive competitor (GM Jan. 2, 2022).
Had the 2010 deal gone through, there was much speculation that BHP would sell nitrogen, phosphate, and retail. The same would be even more true today, said analysts, who point to potash being the low carbon of the three major fertilizers and that BHP is targeting net-zero emissions by 2050.
“The smart move is to buy it and break it up,” Charles Neivert, an analyst with Piper Sandler Cos., told the National Post in January 2022. He added that BHP would only be interested in Nutrien’s six potash mines, not in selling seeds, livestock feed, or other fertilizers.
Others this past week suggested that BHP might actually be ready to throw in the towel on Jansen and sell it to Nutrien. BHP expects to close a $9.6 billion deal in May to buy Australian copper and nickel producer Oz Minerals and is fending off a $44 billion class action lawsuit in the UK regarding its 2015 dam collapse in Brazil. In turn, Nutrien could sell off non-potash assets to cover the cost of Jansen.