Canada blocks deal with U.S. company

U.S., Canada flag puzzle

TEXT OF STORY

KAI RYSSDAL: Here's today's man bites dog story from the mergers and acquisitions file. Canada's had a law on the books for about 20 years now that lets the government block some foreign takeovers of domestic businesses, specifically takeovers of firms that're worth more than $270 million Canadian, about $265 million U.S. Anyway, the law's never been used -- until today. Here's the kicker. The foreign company being blocked is American, right, the other half of the world's biggest bilateral trade relationship.

It seems a US company called Alliant TechSystems wanted to buy a Canadian enterprise with some very attractive satellite technology, but Jeremy Hobson reports the $1.3 billion dollar offer wasn't enough to overcome Ottawa's worries about national security.


JEREMY HOBSON: Alliant reached a deal back in January to buy the Canadian company MacDonald, Dettwiler and Associates. Now, you may not have heard of MDA, but those in the space community know all about it. It invented a highly sophisticated satellite system, called RADARSAT-2, that can see through clouds. Theresa Hitchens, with the Center for Defense Information, says it's the crown jewel of the Canadian Space industry.

THERESA HITCHENS: Without MDA, Canada essentially doesn't have a space industry.

And without MDA's satellite technology, Canada would lose a major advantage in the battle for the emerging arctic passage, said to hold a quarter of the world's untapped oil and gas reserves.

HITCHENS: And RADARSAT is the only Canadian asset that could actually see, for example, US submarines under the Arctic.

That national security concern and significant taxpayer investment in RADARSAT, makes the issue a hot potato in Ottawa. Here's the Industry Minister Jim Prentice on the floor of the House of Commons today.

JIM PRENTICE: This Government, as the Prime Minister has noted, is committed to our sovereignty, committed to a radar program, committed to what we have been able to achieve in this country in space, Mr. Speaker.

But still, should the US take this as an insult? Absolutely not, says Michael Hart, a trade expert at Carleton University in Ottawa.

MICHAEL HART: Just think about it the other way around, that a private company sells part of its assets to a Canadian company and it includes control over Cape Canaveral. How would the American people think about that?

The American company Alliant wouldn't comment, except to say conversations with Canada are ongoing, as is a 30-day appeal period.

In Washington, I'm Jeremy Hobson for Marketplace.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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