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Call it the weekend that Canada got left behind.

Microsoft Corp. and Verizon Communications Inc. both took a pass on Canadian assets in their deal-making frenzy, raising an uncomfortable question: If global behemoths don't like our companies, should the rest of us?

The snubbing spree started when Microsoft announced a deal to acquire the handset operations of Nokia Corp. for $7.2-billion (U.S.) in an attempt to buttress its wireless efforts.

The deal means you can cross off one potential suitor for Canada's struggling BlackBerry Ltd., which recently put itself on the market after a fizzling debut for its latest smartphones.

Soon after, Verizon inked a $130-billion deal with Vodafone Group PLC to gain full control of U.S.-based Verizon Wireless and its chief executive said that Canada was "never seriously considered" as a market for expansion.

That ended speculation that the telecommunications giant had set its sights on the country's wireless market, following reports of early-stage takeover talks with Wind and Mobilicity – not to mention big manoeuvring by Canadian incumbent telecom companies to head off the potential threat.

The reaction so far has been a treat for investors.

Canadian telecom stocks surged on Tuesday on relief that they won't be facing Verizon as a competitor any time soon. BCE Inc. rose 3.9 per cent, Telus Corp. rose 6.8 per cent and Rogers Communications Inc. rose 7.2 per cent, taking the stocks back to where they were before the Verizon speculation landed in June.

Even BlackBerry rose 1 per cent, as the hefty price Microsoft was willing to pay for Nokia raises the potential price for BlackBerry, should any suitor express an interest in the company. (No one has yet, making the potential price highly theoretical.)

But the longer-term implications of being passed by aren't nearly as upbeat. Telecom is a mature industry that lacks enticing growth possibilities, while BlackBerry looks like a defeated company.

More broadly, interest in Canadian companies among multinationals has fallen off dramatically this year, suggesting that the lack of interest from Microsoft and Verizon is part of a trend.

According to PricewaterhouseCoopers LLP, the volume of Canadian mergers and acquisitions deals – which includes domestic activity – fell 20 per cent in the first quarter of 2013 over the fourth quarter of 2012.

In dollar terms, M&A activity shrivelled by an amazing 60 per cent, hitting the lowest level since the depths of the financial crisis in 2008. Big deals virtually disappeared.

The second quarter was better, but still marked the second quietest quarter in three years, in terms of volume.

Part of the decline likely stems from government opposition to foreign hands on so-called "strategic assets." BHP Billiton Ltd.'s $40-billion bid for Potash Corp. of Saskatchewan Inc. died in 2010 amid loud opposition. Lowe's Cos. Inc. withdrew its offer for Quebec-based home improvement retailer Rona Inc. after a similar uproar last year.

Now, Ottawa sounds far more open to deal-making: It resisted calls from telecom incumbents to limit foreign players when it looked as though Verizon was coming, and so far it hasn't expressed any reservations over a deal for BlackBerry, should one arise.

But Canada has a bad reputation now, which is going to be hard to overcome.

Deal-making is also suffering because Canadian assets aren't what they used to be. Commodity producers, in particular, have been struggling with high operating costs and threats to commodity prices from a slowdown in the Chinese economy.

Materials stocks are down 45 per cent over the past two years and energy stocks have been drifting sideways for four years, which is hardly the sort of environment to arouse a flurry of bids.

The Canadian stock market isn't sustained by takeovers, of course. But if multinationals see better opportunities elsewhere, investors should too.

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