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Industry Minister James Moore.Fred Lum/The Globe and Mail

The Canadian government weighed in on reports that Chinese PC maker Lenovo might bid for BlackBerry, saying that national security concerns would play a significant role in a review of such a transaction.

"There would be a national security test that, obviously, our government has brought in that would obviously be associated with this because of linkages between this technology and multiple layers of government," Industry Minister James Moore said of the encrypted network that links BlackBerry users, many of whom are in the highest levels of Canadian government. Mr. Moore made the comments in an interview with The Globe and Mail on Friday in Vancouver.

Combined with several recent examples of shuttered takeover deals, the Conservative government's statements indicate that Lenovo's chances of buying BlackBerry outright are still decidedly slim.

Earlier this year, the investment firm Accelero, owned by Egyptian billionaire Naguib Sawiris, tried to buy the business unit of Manitoba Telecom Services in a deal valued at $520-million. Mr. Sawiris already had substantial business dealings in Canada, chiefly through the telecom company Wind Mobile. Still, the federal government axed the deal, citing national security provisions in the Investment Canada Act.

Although there are many differences between MTS and BlackBerry in terms of financial health and business models, Ottawa's decision to block the Accelero bid would appear to limit the Waterloo, Ont.-based company's options. Not only would a Lenovo takeover of BlackBerry likely involve a much higher price tag, it would also put myriad sensitive technologies under the control of a Chinese firm.

"Given this backdrop, even though Lenovo has manifested interest in BlackBerry in the past, I believe that a sale can be quite difficult, although it cannot be readily dismissed," said Frost and Sullivan analyst Ronald Gruia.

A Lenovo bid might have a much better chance of succeeding if the Chinese PC-maker only wants a part of BlackBerry, rather than the whole company. Such a move would allow the government to approve a bid for non-sensitive areas of the BlackBerry business – thereby saving the company from its ongoing financial collapse – without introducing the risk of infiltration of the networks that many government employees rely on for secure communications.

There is some precedent for a Western government approving exactly this kind of deal. In 2005, Lenovo attempted to purchase IBM's personal computer division for $1.75-billion (U.S.). Initially, the deal sparked staunch criticism from several high-ranking U.S. lawmakers, who argued that the Chinese firm should not have access to advanced home-grown technology, and warned Lenovo may use its newly acquired IBM assets to engage in corporate espionage.

However, a U.S. government panel that conducted a thorough review of the proposed deal ultimately raised no objections. The panel concluded that, by acquiring only IBM's PC division, Lenovo would get a commodity hardware business, devoid of any sensitive networking technology.

But a similar strategy in the case of BlackBerry could prove complicated. BlackBerry's various services and products are deeply interconnected, making it difficult to separate them. In addition, some of BlackBerry's less sensitive assets, such as its handset business, have been deemed by many analysts to be essentially worthless. Conversely, many of the company's most valuable assets, such as its secure wireless network, are also likely to be of most concern to Ottawa.

Perhaps the most accurate point of comparison to a Lenovo-BlackBerry deal was a proposed acquisition that took place last year with little fanfare.

The deal – which ultimately fell through – involved a Canadian company called PCI Geomatics, a digital mapping firm which was in acquisition discussions with a Chinese company called NavInfo.

Even though, in dollar terms, the deal was an order of magnitude less than what any purchase of BlackBerry would cost, and involved what was likely far less sensitive and ubiquitously used technology, Ottawa still blocked the deal, according to Colin W. Walker, managing director at Toronto-based mergers and acquisitions adviser Crosbie and Company, which worked on the deal.

As with Accelero's bid for MTS Allstream, there was little PCI could do.

"There is no onus on them to provide an explanation," Mr. Walker said.