On March 30, 2012, Federal Finance Minister Jim Flaherty said his government would not block a foreign takeover of Research In Motion, and RIM would be the master of its own destiny. The Minister of Finance is not responsible for the Investment Canada Act (that is the purview of the Minister of Industry), and the comment was made without reference to precisely what kind of deal would be on the table, nor presumably what impact such a takeover would have on Canada. That being said, it was welcome news to investors as the share price reportedly rose 7% on the news.
Ottawa did intervene to stop a bid by Australian mining giant BHP Billiton for Potash Corporation of Saskatchewan Inc. in late 2010 following stiff opposition by Saskatchewan Premier Brad Wall, several other provinces and even business leaders. Stikeman Elliott acted for PotashCorp in that transaction.
Minister Flaherty’s comments appear to indicate that, in the post-Potash world of foreign investment review, the federal government is taking a more pro-active approach to demonstrate that Canada is still open for business. Still, they come on the heels of Prime Minister Harper’s comments in February to the effect that hostile transactions and bids for technology companies in which the government had invested might face a rough ride.
Since the ICA came into force a quarter of a century ago, over 99% of reviewable transactions have been approved. In fact, the bid for PotashCorp was just the second time that a proposed foreign acquisition has been turned down by the Canadian government (other than when a “cultural business” was involved). The first such rejection involved Alliant Techsystems Inc.’s bid for the information systems division of MacDonald Dettwiler and Associates Ltd. That bid was reasonably well-understood by the investment community as having been based on national security grounds, because of the military use of some of the technology involved.
Prime Minister Harper’s comments had led some to speculate whether a bid for RIM would be rejected out of hand by Ottawa, speculation that Minister Flaherty’s comments appear designed to quell.