Investment Canada has recommended approval of a hostile foreign takeover bid for Potash Corp. of Saskatchewan, leaving Prime Minister Stephen Harper to decide on a deal that could trigger a political fight in a key Conservative stronghold.

BHP Billiton Ltd. concluded negotiations on the weekend with Investment Canada, and satisfied officials that the Australian firm met a "net benefit" test, meaning the $38.6-billion (U.S.) deal will have a positive economic impact, according to people familiar with the situation.

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