It could be months now before backers of a controversial $7-billion-plus merger between Canada's premier stock exchange and its London counterpart learn whether they are granted a green light to proceed.
The approval process for combining the Toronto and U.K. bourses risks getting bogged down in pre-election Ontario politics as the McGuinty government prepares to face voters in eight months.
Federal Industry Minister Tony Clement confirmed Monday he will review the deal to decide whether it's a "net benefit" for Canada. The scrutiny period could take up to 75 days: 45 days is the normal length of review but Ottawa can extend this by another 30 days.
The Quebec and Ontario government each have a veto over the deal because their securities regulators must approve big changes in ownership of TMX Group, the firm that operates the Toronto stock exchange. The McGuinty government also has the power to block the transaction by itself if there are "extraordinary circumstances requiring immediate action to be taken in the public interest."
The Ontario Securities Commission and Quebec's Autorité des marchés financiers are preparing to shortly hold public hearings on the merger - proceedings both governments in Toronto and Quebec City will watch carefully to gauge voter reaction to the deal.
The McGuinty government, headed for an election in October, has emerged as chief potential obstacle to the deal that would see Canadian shareholders left with a 45-per-cent minority stake in the new exchange venture.
A financial services industry executive close to the McGuinty government said Finance Minister Dwight Duncan's strong language reflects genuine uncertainty, both within the business community and at Queen's Park, about whether the transaction is a good deal.
"He saw the furor that Potash kicked up," the executive said. "While this is a very different kind of issue from Potash, there is great potential for controversy around it on the eve of an election."
Ontario expressed misgivings twice last week, including when Mr. Duncan called the Toronto stock exchange a "strategic asset" and said he doesn't want this crown jewel owned by the Middle East. The ruler of Dubai would own the proposed venture's largest single stake but would not have a controlling interest.
The phrase "strategic asset" echoes the language of Saskatchewan Premier Brad Wall when he opposed the attempted foreign takeover of Potash Corp. last year. The Harper government ultimately rejected the deal after a backlash against the transaction that threatened to cost the Conservatives seats in Saskatchewan.
Mr. Duncan acknowledged last Friday that, in an election year, he isn't looking at the venture strictly on business terms. He was not available to comment on Monday.
Quebec Finance Minister Raymond Bachand said over the weekend that he wanted "written guarantees" that the merger would serve Montreal's best interests or Quebec would reject the deal.
Mr. Clement shied away from talk of the Toronto stock exchange as a strategic asset.
"I never use the term 'strategic asset,' " he said, noting that the Investment Canada Act - governing scrutiny of foreign takeovers - doesn't mention this notion. "I'm obliged to use terms that are found in the Investment Canada Act."
Separately, he dismissed the notion that the Harper government's record on foreign takeovers - rejecting two in the last three years - has muddied Canada's reputation as a place open to outside investment. He said he only hears that charge on Parliament Hill.