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Prentice defends decision to kill takeover

Industry Minister Jim Prentice says he stopped the sale of the maker of the Canadarm to an American buyer because the U.S. government would have gained control of a satellite perched over the Canadian Arctic.

Mr. Prentice, the first Industry Minister to block a foreign takeover since Canada's current investment rules were rewritten in 1985, stressed at a news conference at the Canadian Space Agency in Longueil, Que., that Canada remains open for business.

Alliant Techsystems Inc.'s planned $1.3-billion purchase of MacDonald Dettwiler and Associates Ltd. was unique because MDA owns the Radarsat-2 satellite, developed with the help of taxpayers' money and used by the Canadian government to monitor the North.

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"What is different about this transaction, in my judgment, it was not a transaction that had a net benefit to Canada," Mr. Prentice said. "Central to that was the effect of extraterritorial effect of foreign law on those assets should that transaction have proceeded," Mr. Prentice said, referring specifically to Radarsat-2.

Mr. Prentice announced his intention to scotch the sale last month, and neither Alliant nor MDA managed to convince him to reverse his decision during a 30-day appeal period that ended yesterday.

The Industry Department announced Mr. Prentice's final decision in a statement dated yesterday but released after midnight in Ottawa.

"I reached this decision after an extensive and rigorous review process," Mr. Prentice said in the statement. "Based on this decision, ATK cannot implement its proposed acquisition of the information systems business of MDA."

Critics of the MDA purchase made the case during Mr. Prentice's review that the U.S. government by law has control over satellites owned by American companies. That stoked fires in Parliament, turning the sale into a political issue as even some Conservative backbenchers voiced their opposition.

To soften the blow to MDA, Mr. Prentice said today that the Richmond, B.C.-based company will get a four-year, $109-million contract for service work on the International Space Station.

He also said he would continue to press for business for Canada's space industry in the U.S. and Europe.

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"We will work diligently to ensure American markets are available to Canadian companies," Mr. Prentice said. "Canadians should not have to sell their assets or their companies to access foreign markets."

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About the Author
Senior fellow at the Centre for International Governance Innovation

Kevin Carmichael is a senior fellow at the Centre for International Governance Innovation, based in Mumbai.Previously, he was Report on Business's correspondent in Washington. He has covered finance and economics for a decade, mostly as a reporter with Bloomberg News in Ottawa and Washington. A native of New Brunswick's Upper St. More

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