Sorry Bill Gates, but you just don't have the experience to buy a company like Research In Motion Ltd.
You and your pals at Microsoft Corp. may have invented Windows and BASIC and changed the world of personal computing forever, but have you ever built a successful smart phone? Didn't think so.
Same for you, John Chambers. Cisco Systems Inc. is a fine enterprise, one of the few Internet bubble companies that lived up to the hype. But you probably don't pass the experience test under Canada's net benefit rules, even though many people think that if RIM's owners one day decide to sell, you guys or Microsoft would have been the logical buyers.
In fact, since we're on the subject of experience, foreign private equity buyers need not apply for most acquisitions. You don't really make anything, so by definition you have no experience in production of much of anything. Sorry about that. Better luck in the next country.
You didn't know there was an experience requirement for foreign acquirers looking to buy big Canadian companies? Nobody else did either, before Sunday. That's when Industry Minister Tony Clement, in justifying turning down BHP Billiton Ltd.'s bid for Potash Corp. of Saskatchewan Inc., unveiled the experience test.
Mr. Clement pointed to the fact that BHP isn't in the potash business yet as a reason for turning down its attempt to get into the potash business. BHP is big, nay gigantic, in the mining industry for coal and iron ore, but not potash, so "they do not have comparable experience to [Potash Corp.]in the mining and marketing of potash," he said.
That's one of the reasons that the minister said BHP fell short of proving it would help Canada compete in world markets; enhance productivity, efficiency and innovation; and enhance the country's overall level of activity.
Mr. Clement is promising to soon to give more clarity on just what the rules are now, something investors are clamouring for in the wake of the almost unprecedented rejection of the BHP bid.
This would be a good time to pause and review what the old rules were, except there really weren't any - also far from an ideal state of affairs. Acquirers just promised a net benefit, and that was good enough for us in Canada.
There was definitely no experience test. Good thing for buyers such as Xstrata PLC, which was a nickel newbie when it acquired Falconbridge Ltd. four years ago to become a world player.
But that was then. Now, it's a little more complicated. So until Ottawa lays out the rules, here's a simple checklist, based on the experience of the Potash Corp. takeover battle, to tide would-be foreign acquirers over.
1. Will this be a new line of business for you?
2. Is the Canadian company you want to buy big, good at what it does, or otherwise "strategic" - i.e. is the target what an acquirer would call "attractive"?
3. Is the target company based in a province with a charismatic premier? (Don't worry too much about this one, it doesn't narrow the field much.)
4. Are you bidding for a flagship company in a province that sends a lot of governing-party MPs to Ottawa, where a backlash against the transaction would lead to a significant loss of seats? For those of you, such as BHP chief executive officer Marius Kloppers, who are ignorant of the intricacies of Canadian politics, that could include Alberta, British Columbia, Saskatchewan, Ontario and Manitoba.
5. Are you bidding for a flagship company in a province where the government of the day hopes to make significant gains to - at last - achieve a majority? Again, for those outside Canada, that would include the provinces not mentioned in question four.
6. Do any of the following apply to the target company: It is the largest employer in the town/city/region/province; it is one of the largest taxpayers in the town/city/region/province; its name includes the name of a province; it has been referred to, even in passing, as "iconic," or a "Canadian champion"?
If you answered yes to any of these questions, please go back to wherever it is you come from. Don't forget to tell everybody when you get there that Canada is still open for business.