The subsidiary death knell

[CHIMO]

The battle for Potash Corp. seems on the verge of ending, with no rival bid to BHP Billiton’s $39-billion (U.S.) hostile offer in sight. It will be replaced by a new battle directed by Investment Canada. Will the agency, the steward of the notoriously lame “net benefit” test, approve Potash Corp.’s takeover?

BHP knows it is nowhere near seizing the Prairie prize even though the chances of a competing bid are falling faster than Canada’s standing at the United Nations. It is well aware that politics could upset its plan, hence the statement earlier this week that Saskatoon will be BHP’s “global potash headquarters,” complete with a “leadership team” that would actually “live, pay taxes and raise their families in Saskatoon.” As for the Saskatchewan government’s fears about billions of lost revenues under Potash Corp.’s Australian ownership, BHP claims to have a cure for that too, details to come.

Well, maybe. Anyone who cares about the preservation of head offices, and the economic, social and cultural benefits that go with non-branch-plant status, should spend a few minutes reading the history of Calgary’s Talisman Energy, one of the world’s biggest independent oil companies.

Talisman wasn’t always Talisman. It used to be called BP Canada, one of the colonial divisions of the energy giant once called British Petroleum, later the sponsor of the biggest oil spill in American history. BP Canada was the classic branch plant. It was unfocused, dabbling in (money-losing) mining as well as oil and natural gas, did little drilling and was run from afar. Even the London head office got bored with its little Canadian beast and decided to cast it adrift, oblivious to its potential in a country that was destined to become an energy superpower.

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