Saskatchewan Premier Brad Wall warned the federal government that approving BHP Billiton's controversial bid to acquire PotashCorp would be a "betrayal" of his province, a day before Ottawa is expected to render a decision on the matter.
Reports had indicated that Investment Canada tentatively approved BHP Billiton's bid, with certain conditions attached. But during question period on Tuesday afternoon, Prime Minister Stephen Harper said the deal was still being assessed by federal officials.
"The government is obligated and obliged to listen to all sides, to consider all factors. That's precisely what it's doing, including, I may add, from all members of our Saskatchewan caucus," Harper said.
Ottawa has until midnight Wednesday to approve or reject the hostile takeover bid, which would give Anglo-Australian firm BHP Billiton control over a hefty portion of Canada's potash supply.
Harper said Industry Minister Tony Clement will deliver the decision.
The federal government has been criticized for the way it has dealt with recent foreign acquisitions, including the takeover of Inco by Brazil-based Vale in 2006. A lengthy legal battle between Ottawa and U.S. Steel Corp. is also underway after the firm acquired Stelco in 2007.
The proposed BHP deal is also politically difficult for the Conservatives, since 13 of the party's MPs hail from Saskatchewan, where the takeover is unpopular.
Earlier on Tuesday, Wall said Ottawa would betray his province if it approved the deal.
He described pledges by foreign companies to abide by special conditions as "dreams and train smoke" and said Investment Canada has a spotty track record for scrutinizing whether foreign firms carry out promises made as part of a foreign takeover.
Saskatchewan could challenge Ottawa in the courts if the deal goes through, he added.
"If we're going to mount a legal challenge that would have to happen quickly and it will," he said.
Wall has campaigned against the sale, claiming it would cost the province billions in lost revenue. On Sunday, he called PotashCorp "a Canadian corporate champion" during an interview with CTV's Question Period.
BHP's offer works out to US$130 per share for the Canadian company. On Tuesday, Potash shares closed down $2.43 at $146.27 on the Toronto Stock Exchange.
Earlier in the day, BNN analyst Pamela Ritchie told CTV News Channel that shareholders could reject the offer if Ottawa allows it to proceed.
"From the business side of things, a lot of people are believing that PotashCorp cannot be taken over for $130 per share by BHP Billiton," she said. "They believe the shareholders themselves will hold out for more."
Potash is a valuable resource that is made into fertilizer, which is essential for growing crops. It is in high demand around the world, but particularly in countries such as India and China.
PotashCorp is the world's largest producer of the material. More than half of the world's potash supply is found in Saskatchewan.
BHP has said that it would make the province the headquarters of its global potash operation as part of the deal.
With files from The Canadian Press and The Associated Press
