TONY LEWIS
When the World Junior Hockey Championship rolled into Saskatoon last Christmas, spectators were greeted with a barrage of arena signs and promotions spotlighting the tournament's major corporate sponsor, BHP Billiton Ltd.
For many hockey fans, unaware of the world's largest mining company, there was every reason to believe BHP was a Saskatchewan business.
Which, of course, was the whole idea. For the past five years, the Anglo-Australian mining giant has positioned itself as a Saskatchewan corporate citizen, boosting its profile in the province's vast potash industry.
The end game became evident Tuesday, when Saskatoon-based Potash Corp. a provincial icon and the world's largest fertilizer company, disclosed it is the target of a $38.6-billion (U.S.) unfriendly takeover bid by BHP.
This is a story of two strikingly different global companies, whose Saskatchewan identity is going in two different directions.
Potash Corp., a former provincial Crown corporation, is so embedded in the local fabric that its official name is Potash Corp. of Saskatchewan. But just a third of its employees are now located in the province, and chief executive officer William Doyle is an American who lives in Chicago, and spends a week a month in Saskatoon.
Meanwhile, BHP has pursued a deliberate strategy to become a local hero through its ambitious hiring plans, sponsorships and occupancy of a striking new building in downtown Saskatoon, the province's leading business city.
The game plan seems to be working as BHP bids to buy Saskatchewan's marquee company. "BHP has been signalling to the public it wants to have a big presence here and the public has been receptive to that," said Eric Cline, vice-president, corporate affairs, for Shore Gold Inc., a local natural resources company, and a finance minister in the province's former NDP government.
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Meanwhile, "I don't think there is a sense that Potash Corp. is a small locally grown company," Mr. Cline said. There is a perception, he noted, that the company is run from Chicago - and while local people value the head office jobs that remain in Saskatoon, they accept that market forces rule the day. "I have not detected any sense of regret or alarm [from the bid] but more of a feeling that Saskatchewan is where people want to invest in potash."
This acceptance takes some bargaining traction away from Mr. Doyle, who may lack the political support he covets to fend off an unwelcome bidder. He said Tuesday that "I don't think it's any secret we are regarded as a provincial champion in Saskatchewan and some people think of us as a national treasure in Canada. I'm one of those."
BHP took pains to show sensitivity to those feelings. Its chairman Jac Nasser, in a letter to Potash Corp.'s board, offered assurances that BHP would establish its global potash headquarters in Canada, while basing its Canadian potash management in Saskatchewan. In fact, the province's Energy and Resources Minister, Bill Boyd, said Tuesday that a law requires the retention of a head office function in Saskatchewan.
Since 2005, BHP has been building its stake in the province through acquisitions of potash exploration rights. It expects to decide by the fall of 2011 on the future of its Jansen site, 140 kilometres east of Saskatoon - potentially the first greenfield potash mine in the province in 40 years.
To accommodate its growing presence, it moved into the sleek Discovery Plaza in downtown Saskatoon. This spring, it had 30 people there, with plans for 75 within a year. If successful with its bid for Potash Corp., it will vastly outgrow even these projections.
The markets have been rife with rumours BHP was going after Potash Corp., whose CEO Mr. Doyle said Tuesday that he and BHP CEO Marius Kloppers have known each other for years. "This [bid]has been the rumour of the month for two years. I have answered thousands of questions on this subject. Did it catch me by surprise? Hardly."
Mr. Doyle said BHP had limited time to make its move, given the potential for higher share prices for Potash Corp. Despite BHP's talk of starting a new mine project, "I think we've found out that was pretty much a ruse. They were using that to try and drive our share price down."
For BHP, Potash Corp. would be just one piece in a diversified natural resources empire. The product of a 2001 merger of Australia's Broken Hill Proprietary and British-Dutch giant Billiton, it has 100 operations in 25 countries. It has a hand in aluminum, coal, copper, manganese, iron ore, uranium, nickel, silver and titanium, and has substantial interests in oil, gas and diamonds.
Mr. Kloppers, the Melbourne-based CEO who turns 48 next week, is a South African-born former management consultant with McKinsey & Co. A highly disciplined technocrat, he is also a committed vegetarian with a coffee-guzzling habit who forbids paper clutter on his managers' desks.
Meanwhile, Mr. Doyle, 60, is an exuberant 36-year veteran of the potash industry, who has spent the past 11 years running Potash Corp. He built a 6,000-square-foot house in Saskatoon, but sold it in 2004 for a reported $2-million and moved back to Chicago. While Potash Corp. is still a big noise in local philanthropy and employment, the most senior executive with a home in the province is chief financial officer Wayne Brownlee.
Today, Mr. Doyle has offices in Saskatoon and Chicago, but argues his primary role is to get out and meet with Potash Corp. customers, investors and merger and acquisition candidates. "I spend about a week a month in both places and the other two weeks on the road," he said recently. "We're a global corporation and our headquarters are very proudly in Saskatoon and will always be, but we operate commercially in the best interests of customers and shareholders."
While BHP has worked hard on its local profile, the company still has a way to go before it is well known in the province, said Brooke Dobni, a professor of strategy at the University of Saskatchewan's Edwards School of Business. That will likely change as the bidding war develops, but he suggested BHP should hire a prominent local person as its standard-bearer in the province.
Meanwhile, BHP continues to look for opportunities to build its local brand. Its managers in Saskatoon said last spring that they worked hard to sell non-Canadian head office managers on the value of a junior hockey sponsorship, and it paid off handsomely.
"Although we're a large company that is known around the world, we're new to Saskatchewan," Derek Chubb, BHP's local manager of sustainability and external relations, said last spring.
And there is nothing like a takeover bid to raise awareness of the company.