Prime Minister Stephen Harper drew an apparent line in the sand on foreign takeovers on Friday, saying he wanted to see BlackBerry-maker Research In Motion grow “as a Canadian company” and questioning whether hostile takeovers of key domestic firms are in the country’s best interests.
In an interview with Reuters, Mr. Harper declined to speculate on how the government might react if a foreign firm put in a bid for hard-pressed RIM. But he singled out hostile takeovers and bids for what he described as “critical technology” companies as ones that the government might block.
“I can’t make comments to you that would prejudice any kind of a bid, especially one that is completely hypothetical and may not happen,” he said in response to a question about a possible foreign bid for RIM.
“But RIM, as you know, is a strong Canadian company. It’s been an important part of the Canadian business landscape, and obviously we want to see that company succeed and continue to grow as a Canadian company.”
RIM shares have slumped in recent years as the company’s signature BlackBerry smartphone has lost ground to popular new rivals from the likes of Apple and Google. There has been considerable speculation that RIM could be sold, or broken up into valuable parts.
Speaking in an interview in his wood-panelled office in Ottawa, Mr. Harper insisted that his Conservative government is still open to foreign investment, and noted that it had vetoed only two would-be takeovers.
But not every foreign bid is good for Canada, he said.
“Takeovers of critical technology that the government’s invested in, or … hostile takeovers of key Canadian businesses, are obviously something that I think is widely understood is not in this country’s interest,” Mr. Harper said.
The government has the right to determine whether foreign takeovers over a certain size may go ahead. Its decision is based on whether the bid is considered of net benefit to Canada.
The vast majority of takeovers are approved, but Mr. Harper’s government stunned investors in 2010 when it rejected a $39-billion offer for fertilizer producer Potash Corp from Anglo-Australian mining giant BHP Billiton.
After that rejection, the government said it would quickly draw up guidelines to clarify what was meant by being “of net benefit.” There is still no date for when such guidelines might be published.
The federal government was an early investor in RIM, now the country’s best-known technology company, with a $34-million investment from its Technology Partnerships Canada in 2000. That was at a time when the still-new technology firm had annual revenue of $85-million.
Todd Coupland, an analyst at CIBC World Markets, said that a hostile bid for RIM would be difficult enough, even without reservations about whether Ottawa would let it through.
“People are the lifeblood of that company, it isn’t just hard assets. Making a hostile bid in technology and intellectual capital like that is going to be very, very tricky,” he said.
RIM’s volatile stock ended the day 1.9 per cent lower at $16.88 on Nasdaq and down 2.3 per cent at $16.78.
Separately, the Conservative government is considering whether to ease restrictions on foreign ownership of telecommunications companies, but Mr. Harper declined to be drawn about what it might decide.
Decisions would come in “the very near future,” he said.