BHP, conceding defeat for the third straight time on a major proposed acquisition, has bowed to calls from some shareholders for a return of capital, signaling that it has limited opportunities for other big takeovers.
"I think the regulatory environment is very difficult to negotiate when you are as big as BHP," said Tim Schroeders, a portfolio manager at Pengana Capital.
"They have been very ambitious in terms of the size of deals that have been proposed and that makes it very difficult to fly under the radar in terms of the regulatory process."
Canada blocked BHP's bid for the world's largest fertilizer 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 Chief Executive Marius Kloppers said in a statement.
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.
"The company believes that the Minister of Industry would have required additional undertakings beyond those BHP Billiton had already offered, which would have conflicted with BHP Billiton's business strategy and been counter to creating shareholder value," the company said.
BHP will book $350 million in costs for the Potash Corp deal, with about 70 percent of that reflecting the costs of the $45 billion financing facility it had lined up for the deal.
Kloppers has long said the company would prefer to spend its cash pile on development projects and acquisitions rather than giving it back to shareholders.
The company said it would continue to pursue its Jansen potash project in Canada, which would be the world's biggest single potash mine.
"We remain committed to Canada and we plan to develop a significant presence in the potash industry in Saskatchewan," Kloppers said.
(Reporting by Sonali Paul; Editing by Mark Bendeich)
(Additional reporting by Mark Bendeich)