THE DISTILLERY: Kloppers calls on Canada

The resource sector is back in the limelight this morning following news of BHP Billiton's $US39 billion desire to follow rival Rio Tinto into Canadian business. Rio pioneered the way in 2007 with a similarly-priced tilt at Alcan that almost brought it undone. BHP has at least got its timing right, unless the world economy is headed for another blow-up.

BHP's bid for Potash Corp overnight failed to get to first base – for the time being – because (at $A43 billion) it was too cheap. The bid came late for most finance jotters, but The Australian's Matthew Stevens, who is well-placed in these matters, fired off a few glowing points about BHP's move: "Marius Kloppers first took a very, very good look at the fabulously monikered Potash of Saskatchewan back in 2007. But instead of taking on what would then have been a $US70 billion hostile offer for a Canadian corporate kingpin in a deal that would have effectively represented BHP Billiton's entry into the tight but enriching little world that is potash, Kloppers turned his guns on an even bigger elephant in his space. He decided to go after Rio Tinto instead. Audacity and ambition are evidently characteristics Kloppers has in almost as much challenging abundance as his company does financial muscle. "

The story mostly got good play this morning, with reports on page 1 of the Australian Financial Review and some attempt at backgrounding the deal with a commentary buried on page 51.. But the best coverage is in the Financial Times on its Asian website and in its Asian edition today with this report and the suggestion that BHP could bid up to $US60 billion without hurting earnings. The Sydney Morning Herald seemed to miss the story in some editions, but had a report buried on its website.

So Canada is the flavour of the week. The Age's Malcolm Maiden worries about that the Agrium move on AWB: "Canadian group Agrium's $1.2 billion counter-offer for AWB puts the onus on our two prospective governments to state how far the foreign invasion of Australia's wheat export industry is going to be allowed to go. There certainly is a national interest in drawing the line before the invasion is complete, and Agrium's bid suggests it will be complete very soon. The Canadian group's trumping of a proposed merger of AWB and GrainCorp is part of a chain of events that could quickly put three-quarters of Australia's grain exporting business in the hands of foreign groups if left unattended." And what about controls on Australian mining companies raiding Canada's fertiliser industry, as BHP did overnight? Foreign investment is a two-way street.

But the sexy story this morning is the struggle by the Melbourne-owned DFO group to remain afloat and protect some of the fortune of ACCC chairman Graeme Samuel. This story has it all: power, real estate, millions of dollars, friendships, poor governance, fortunes lost or diminished. The Sydney Morning Herald's Elizabeth Knight looks at the fallout for Samuel: "The $50 million investment he now stands to lose in the Direct Factory Outlets (DFO) chain appears to be have been made, unaware to him, by his corporate partners... Samuel clearly enjoys the power and status of running the ACCC. It has come at a cost – which might have been avoided had he recognised the potential pitfalls of putting so much money into a venture over which he had no control. He is now attempting to recover part of his fortune and some of his reputation."

As did The Australian's John Durie yesterday and this morning: "ACCC boss Graeme Samuel is now in a difficult position adjudicating on the NAB-AXA Asia Pacific merger. NAB is one of the lenders to his investment in the troubled DFO retail chain. No one would suggest Samuel would make any decisions based on his personal interests or do anything breaching any ethical standards. But he should consider stepping aside from the impending decision on the NAB bid for AXA. The DFO investment was made public at the time of his appointment as ACCC chief back in 2003, as was the fact that it was managed by a blind trust. But news the chain is struggling has thrown a new light on the matter."

The Herald Sun's Terry McCrann took a clear-sighted, but tough line: "Samuel's problem – mistake – was that he set out to be purer than pure. By setting up a blind trust to hold his at that stage lucrative investment in the DFO stores. So that he didn't control, not even know what was happening. What was happening is that the assets of the four profitable stores he was invested in were being pledged to secure the burgeoning debt of the South Wharf disaster. There is no way that any price paid for South Wharf will cover its debt; so that will probably wipe out the investment of all those in the other – still profitable – DFO stores."

In other columns, The Australian's Tim Boreham reckons GWA, which reported yesterday, has done well in a tough trading environment: "GWA has weathered the downturn remarkably well, with shrinking demand offset by careful scrutiny of costs and the supple chain improvement. While the company ended up with more employees – 1922 versus 1891 at the start of the year – revenue per worker is higher and the number is skewed by the April acquisition of Brivis Climate Systems."

Fairfax's Insider, David Symons, looks at the annual results of Primary Healthcare and has a timely warning for investors and lazy investment analysts: "There must be days when Dr Ed Bateman feels that one hand is tied behind his back as he struggles to grow the bottom line at Primary Health Care. The company's full-year result – which saw earnings before interest, tax, depreciation and amortisation come in at $331 million – was no shocker, but was down 7 per cent on last year. Coming in at the low end of expectations, Primary's was the worst set of figures on what was generally a good day for profit reporting. However, the numbers reflect federal government funding cuts for Medicare services outside hospitals, which have seen annual spending fall by about $20 for each Australian since the start of last year. The days of health care being a defensive sector with steady profit growth are over." Sigma's woes and downgrades at Sonic should also be added to Primary's problems.

And, finally, with the ANZ telling the market on Monday that it was interested in a controlling stake in the Korea Exchange Bank (five days ahead of its market update on Friday), The Australian's Andrew Main has a timely reminder on the dangers of owning this bank: "We know ANZ chief executive Mike Smith doesn't lack bottle... But it's fair to say the saga of Korea Exchange Bank, which ANZ is looking to buy into, may yet test him."