Top global miner BHP Billiton scrapped its $39 billion bid for Canada's Potash Corp, the world's biggest deal this year, and bowed to calls from investors to return cash with a $4.2 billion share buyback.
BHP, conceding defeat for the third time in a row on a major proposed acquisition, signalled with its revived share buyback that it had limited opportunities for other big buys.
Shareholders will be eager to hear what further growth prospects the company will chase with its cash pile when BHP Chief Executive Marius Kloppers fronts the group's annual meeting in Australia tomorrow.
Canada blocked BHP's bid for the world's largest fertiliser maker on November 3 and gave BHP a month to prove the takeover would benefit Canada.
'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.
It will be tough for the world's largest miner to chase other major buys, given its size and dominance in most of its markets.
BHP said Ottawa was asking for too many concessions beyond the more than $1 billion worth of undertakings the company had already offered as benefits to Canada.
In the first public comments on why Ottawa blocked BHP, Canadian Industry Minister Tony Clement said it was partly because BHP lacked expertise in potash mining and marketing, so it was not clear the deal would benefit Canada.
'BHP did not demonstrate to my satisfaction that their plans to market potash would enhance Canada's already prosperous position to compete internationally,' he said after BHP withdrew its bid. He acknowledged the rejection was controversial and said Canada continued to welcome foreign investment.
Potash Corp said it was vindicated in its decision to reject BHP's offer of $130 a share as too cheap and was in a strong position to grow on its own.
BHP shareholders have continued to back Kloppers, despite his having spent $875m on three abandoned deals - the Potash bid, the Rio Tinto bid in 2008, and an iron ore joint venture with Rio Tinto last month that would have yielded $10 billion in savings.
BHP said it would pursue its Jansen potash project in Canada, which would be the world's biggest single potash mine.
Investors and analysts blamed regulatory or political factors and not any failure by BHP for wrecking the deals.
BHP's share buyback came as no surprise, although the timing was a bit sooner than expected. It reactivated the remaining $4.2 billion of a $13 billion buyback put on hold in 2007 when it launched a bid for rival Rio Tinto.
Shareholders who have been clamouring for a capital return said it was a good start but said the company could afford to return much more.
