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UPDATE 1-BHP does not regret money invested in scrapped deals

Published 11/15/2010, 10:37 PM
Updated 11/15/2010, 10:40 PM

* Potential returns outweighed risk of deals failing

* Remains committed to developing Jansen potash in Canada

* Sees favourable commodities supply-demand outlook (Adds chairman, CEO speech comments)

PERTH, Nov 16 (Reuters) - Global miner BHP Billiton does not regret spending $875 million pursuing three massive deals that failed over the past two years, as the transactions could have had huge returns, its top officials said on Tuesday.

BHP killed a $39 billion bid for Potash Corp, the world's top fertiliser maker, on Monday, 11 days after Canada blocked the deal.

That followed the company's decision a month earlier to scrap an iron ore joint venture with Rio Tinto after running into competition concerns in Europe, Australia and Asia. It also abandoned a full takeover of Rio Tinto in 2008.

"While we invested time and money in pursuing each opportunity, we continue to believe that the potential returns outweighed the risk of not being in the position to proceed," BHP's new Chairman, Jac Nasser, told shareholders at the group's annual meeting in Australia.

The Potash Corp deal marked the third failed deal under Chief Executive Marius Kloppers, but his speech to shareholders expressed little regret.

He simply said the company was unable to satisfy Ottawa with enough undertakings, beyond $1 billion-plus in commitments that the company gave, to win approval for the deal.

"We believe that the reasons provided by the Minister for Industry for his interim decision would have required undertakings that would have been adverse to our strategy and counter to creating shareholder value," Kloppers said.

One of Ottawa's main concerns was that BHP may delay development of its massive Jansen potash project in Saskatchewan province if it succeeded in taking over Potash Corp.

BHP told the government it would make a final investment decision in 2012, but that was not good enough.

"We have said all along that we plan to develop a significant presence in the potash industry, and this remains true today," Kloppers told shareholders, adding that BHP would continue evaluating Jansen and other development opportunities in the province.

Retail shareholders backed Kloppers' acquisition ambitions, but said they were starting to worry about the money that has gone down the drain.

"I'm very happy with Kloppers. But I'm a bit disappointed with the amount of money being spent on failed acquisitions," said John Black, a long-time shareholder in BHP ahead of going into the shareholder meeting.

BHP said it sees itself well-positioned to take advantage of supply shortfalls in key markets as rivals had slowed expansion projects during the global financial crisis.

While it saw an "overall modest outlook for the world economy," it was encouraged by demand for coal and metals in emerging economies. "As a result, the overall supply-demand conditions are favourable to us," Kloppers said. (Reporting by Sonali Paul and Rebekah Kebede; Editing by Balazs Koranyi)

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