As Stephen Harper weighs BHP Billiton Ltd.'s bid for Canada's largest potash miner, the debate over foreign takeovers is shifting in Canada's business community.
After years of remaining mostly mute as foreign acquirers devoured Canadian global businesses such as Alcan Inc., Inco Ltd. and Four Seasons Hotels Inc., a growing number of business leaders are privately and publicly questioning the country's open door takeover policy.
Opinions differ as to how far Canada should close the door. But several prominent business chiefs say Ottawa should be getting tough with foreign buyers such as Australia's BHP Billiton, which is nearing the deadline for its bid to acquire Potash Corp. And that view is held even by some of those who are normally heard favouring as much foreign investment as possible.
"Canada has been an unsophisticated player," said Roger Martin, a leading free-trade advocate and dean of the Rotman School of Management.
"There are tough, tough people in the world who couldn't care less what happens to Canada."
The concerns are fed by a string of broken promises from foreign acquirers who failed to honour their commitments to Ottawa to protect local jobs and investments.
Another sore point is the lack of takeover reciprocity in a variety of countries, including Australia, Brazil and China, where takeovers of national champions are either restricted or prohibited. Earlier this month, Britain fed global protectionist anxieties by tightening takeover rules in the aftermath of Kraft Foods' takeover of Cadbury PLC.
"I would like Canada to be a tougher and more effective negotiator," said Gerry Schwartz, chairman of Onex Corp., one of Canada's most active acquirers at home and abroad.
Mr. Schwartz said he remains opposed to putting up barriers to foreign takeovers, but he said Canada should "work hard and quickly to seek reciprocal M&A rights" when faced with a global buyer from a more protectionist regime.
Norman Keevil, chairman of Teck Resources Ltd., said BHP's offer for Potash Corp. has put Canada and Ottawa "in a no-win situation." While Mr. Keevil says Canada has to be careful not to join the "cacophony" of protectionism, the benefits to Canada of a Potash Corp. takeover are debatable.
"BHP should be welcomed to build its new potash, or any other new mine, just as any other company would be. ... That would be creative. It is a moot point how 'creative' or beneficial [it is]simply buying an existing major producer."
A recent survey conducted by Gandalf Group for The Globe and Mail showed that 50 per cent of executives contacted had concerns about the deal.
Other businessmen, such as Dominic D'Alessandro, the former CEO of Manulife Financial Corp., and Calin Rovinescu, CEO of Air Canada, have publicly urged Ottawa in recent weeks to be more active about supporting Canadian-owned global champions such as Potash.
"Canada needs to be more strategic as to what it demands from buyers in industries that are core drivers of the economy such as natural resources, transportation, telecommunications and finance," Mr. Rovinescu said.
"We cannot be boy scouts running around in short pants when it comes to global competitiveness especially when we see what other countries are doing".
Pockets of resistance are evident even on Bay Street, where government intervention is seldom a thing to cheer.
"I don't want to see this deal happen, and I'm not supposed to say that because I make my living doing deals," said one senior takeover adviser who declined to be identified and who is not involved in the proposed takeover.
Business chiefs are typically reluctant to challenge foreign takeovers because of concerns that it would deter foreigners from operating new businesses or investing in Canadian companies.
Sources said BHP executives have delivered that very message to Ottawa officials, warning that saying no to the acquisition would harm Canada's reputation in international markets.
Rotman's Mr. Martin accused BHP's executives of being "two-faced hypocritical bastards" for wagging their finger at Canadian resistance.
Australia blocked a Royal Dutch Shell PLC takeover of Western Australia-based Woodside Petroleum Ltd. on the grounds that it was against national security.
The country also refused to approve a 2001 merger of BHP with London-based Billiton PLC until the British company agreed, among other things, to keep the new company's headquarters, CEO residence and stock listing in Australia.
Canada has never insisted on such concessions.