Top global miner BHP Billiton scrapped its $39-billion bid for Canada's Potash Corp, the world's biggest deal this year, and bowed to calls from investors to return cash with a $4.2-billion share buy-back.

BHP, conceding defeat for the third straight time on a major proposed acquisition, signalled with its revived share buy-back that it had limited opportunities for other big buys.

Shareholders will be eager to hear what further growth prospects the company will chase with its cash pile when BHP chief executive Marius Kloppers fronts the group's annual meeting in Australia today.

"Certainly the best investment is probably in themselves at the moment," said Brendan James, a partner at BHP shareholder Perennial Growth, referring to the prospect of a bigger buy-back.

Canada blocked BHP's bid for the world's largest fertiliser 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," Kloppers said in a statement.

It will be tough for the world's largest miner to chase other major buys, given its size and dominance in most of its markets.

"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, who has shares in BHP.

"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."

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.

In the first public comments on why Ottawa blocked BHP, Canadian Industry Minister Tony Clement said it was partly because BHP lacked expertise in potash mining and marketing, so it was not clear the deal would benefit Canada. "BHP did not demonstrate to my satisfaction that their plans to market potash would enhance Canada's already prosperous position to compete internationally," he told reporters in Toronto after BHP withdrew its bid.

He acknowledged the rejection was controversial and said Canada continued to welcome foreign investment. "Our government recognises, however, that there may be ways to improve the review process," Clement said.

Canadian Prime Minister Stephen Harper said on Sunday the government would set out guidelines to clarify what major foreign investments would be acceptable.

Potash Corp said it was vindicated in its decision to reject BHP's offer of $130 a share as too cheap and was in a strong position to grow on its own.

Shares in Potash Corp have traded consistently above the bid price, closing at $139.91 on Friday.

BHP shares closed on Monday down 0.4% at A$44.14 in a flat Australian market, with the buy-back seen as modest.

Shareholders continued to back Kloppers, despite his having spent $875-million on three abandoned deals: the Potash bid, the Rio Tinto bid in 2008, and an iron ore joint venture with Rio Tinto last month that would have yielded $10-billion in savings.

"Marius continues to run the company in an extremely efficient manner. The fact that he's been unable to consummate a couple of deals doesn't change our view on his ability to manage the company," said James Bruce, portfolio manager at Perpetual Investments, the 10th-largest investor in BHP's Australian stock.