It is nothing less than a case of craven political pandering at its worst. In rejecting U.S. defence giant Alliant Techsystems’ takeover of MacDonald, Dettwiler and Associates’ aerospace unit, Industry Minister Jim Prentice is using the Investment Canada Act as a pretense to claim the $1.3-billion all-cash deal isn’t in this country’s best interests. Oh, really?
Since the Act was adopted in 1985, the government has considered 16,500 deals, conducted reviews of 1,600 and rejected none — until now. There is no history of the act being used to even hinder a transaction involving the United States, except those dealing with a cultural business. Recent scrutiny has focused on state-owned enterprises buying Canadian, but such entities have bought PrimeWest, PetroKazakhstan and UraMin in recent years — without roadblocks put up by government. The only explanation for Prentice’s lack of faith in the free market is that it’s an attempt to score points with nationalists who have been crying about the hollowing out of corporate Canada. Never mind that some of our biggest and best employers are, and always have been, owned by foreigners.
Let’s face facts. First, the deal is in the interests of MDA’s shareholders and of its employees. A U.S. takeover is the best way to ensure MDA’s space division gains future work, because the Buy America Act and post-9/11 restrictions make it harder for foreign companies to win contracts from the government and the Pentagon. Why is Ottawa taking away shareholders’ right to do as they wish with their company?
Well, there’s the IP issue. But whether ownership of MDA’s Radarsat-2 satellite — the presumed sticking point, since the government has spent $445 million on it — resides here or abroad is moot. It’s impossible to imagine a scenario where Alliant would renege on a long-term contract to provide Canada with images from Radarsat. And let’s remember that when the original contract was awarded in 1998 to MDA, the company was owned by Orbital Sciences, based in Dulles, Va. At last check, Virginia was in the United States, and nobody complained then.
Alliant has until May 8 to come up with a solution that appeases Prentice. But we hope he and/or his political masters come to their senses before then. Otherwise, they risk going down in history as running the most anti-business and anti-shareholder government since the Pierre Trudeau era, circa the Foreign Investment Review Agency.