Minister of Industry Christian Paradis on Wednesday, March 14, announces the government will pass a law allowing non-Canadians to buy up to 100 per cent of domestic wireless firms that have a market share of 10 per cent or less.Sean Kilpatrick/The Canadian Press
Traders spent the weekend trying to get inside the head of Industry Minister Christian Paradis.
Investors, particularly hedge fund types, are wondering whether the federal Conservative government meant what it said when it told Malaysia's Petronas it could not buy Canada's Progress Energy Resources Corp. because it did not clear the "net benefit" test. Investors spent the past two days picking apart press releases looking for clues.
Canada has only quashed two previous foreign takeover deals using the Investment Canada Act's murky net benefit hurdle, so hints are scarce. Market players are comparing the wording in Friday night's Petronas-Progress press release to the Conservative's Nov. 3, 2010 statement that effectively killed BHP Billiton Ltd.'s attempt to buy Potash Corp. of Saskatchewan.
Here's how Tony Clement, minister of industry during the BHP-Potash battle, delivered his ruling on the hostile takeover. "I can confirm that I have sent a notice to BHP Billiton indicating that, at this time, I am not satisfied that the proposed transaction is likely to be of net benefit to Canada," he said in a 183-word statement.
Christian Paradis, the current minister of industry, cut-and-pasted most of Mr. Clement's words Friday. "I can confirm that I have sent a notice letter to Petronas indicating that I am not satisfied that the proposed investment is likely to be of net benefit to Canada," he said in his 163-word release.
Mr. Clement said he came to his decision after a "careful and rigorous review." Mr. Paradis landed at his after a "careful and thorough review."
The difference between the statements – the words that have traders wondering if the Harper government really wants the Petronas-Progress deal dead – comes when the ministers discuss timelines.
"BHP Billiton has 30 days to make any additional representations and submit any undertakings. At the end of that period, I will make a final decision," Mr. Clement had said.
Mr. Paradis' statement, however, offers flexibility.
"Under the Investment Canada Act, Petronas now has up to 30 days to make any additional representations and submit any further undertakings, which can be extended with my agreement and that of the investor. Subsequently, I will either confirm this initial decision or approve the acquisition."
Traders believe the Tories offered Petronas an olive branch. The wording of Mr. Clement's statement made it sound like BHP had a 30-day window to change the government's mind and that's it. Mr. Paradis, however, leaves room for multiple extensions, if both sides are game.
Both end their statements with the exact same quote, although they offer different punctuation. "Canada has a long-standing reputation for welcoming foreign investment. The Government of Canada remains committed to maintaining an open climate for investment," Mr. Paradis' statement said. Mr. Clement dropped the hyphen between "long" and "standing."