Back when he was running BlackBerry Ltd., Jim Balsillie called on the federal government to ensure that valuable intellectual property remained in Canadian hands.
As creditors of Nortel Networks Corp. carved up the company, and its patents went on the auction block, Mr. Balsillie warned that selling them to foreigners "may significantly, adversely affect national interests, with potential national security implications" and that "the Government of Canada should review the situation closely."
Finance Minister Jim Flaherty called Mr. Balsillie a "great Canadian" and said he was "entirely right" to raise his concerns to the government.
Shareholders of BlackBerry had better hope Ottawa has forgotten that stance in the intervening four years.
The smartphone company that took up the mantle as Canada's technology champion after Nortel's death – and, at Mr. Balsillie's urging, bought some of those patents – is now in play. Its business model is failing, and its saviour is unlikely to be all-Canadian. The government may soon have to decide whether BlackBerry is a "strategic asset" that should be protected from foreign takeover.
It will have to check its populist and nationalist urges, lest it spook any of the potential partners which may be BlackBerry's last, best hope.
BlackBerry has already given a lot to Canada. It has provided the seeds for a thriving technology hub in Waterloo. It trained engineers. It created wealth. It fed our national pride and confidence that we can create world leaders in technology even as Nortel, the previous generation's tech icon, was crumbling. It helped us believe we can do more than hew wood and draw water and pump oil.
Our national attachment to the company, however, must be separated by what is best for its future growth. And what is best for it may well be a life outside of the public markets, directed by foreign owners or shareholders.
Even a transaction involving Toronto-based Fairfax Financial Holdings Ltd., BlackBerry's biggest shareholder, would be unlikely to be all-Canadian. Fairfax, an insurance and investment holding company, would need partners with money and technology expertise. And if there is a non-Canadian bid that tops anything from Fairfax, the last thing shareholders want is a government that limits the options.
Aside from Canada's big pension funds, it is hard to imagine who in this country could team with BlackBerry in a takeover, a going-private transaction or even a joint venture. At a market cap of nearly $6-billion, BlackBerry is a large bite for anyone in Canada's relatively small private equity industry, especially those firms that have expertise in technology. There are no other Canadian companies of similar scale in the mobile business.
So far, the messages from Ottawa on BlackBerry have been mixed, though clearly softening. Where once the government focused on its desire for BlackBerry to remain Canadian, that theme was absent from communications out of the capital on Monday.
A year ago, Prime Minister Stephen Harper said his hope was BlackBerry would remain a "Canadian" company. Mr. Flaherty echoed that, saying the government's wish was that BlackBerry would "be successful as a Canadian company." However, he added that BlackBerry would be "master of its own destiny."
By Monday, when BlackBerry put out its for sale sign, the message from a representative of the Industry Minister, James Moore, was simply "we wish BlackBerry well," with nothing more to add.
There are, of course, limits to what the government should tolerate in the strategic review. Any deal needs to give proper consideration to national security (as it certainly would be by the American government, which relies on BlackBerry for important communications).
But beyond that, the simple desire to keep a faltering company Canadian is not reason enough to say no to a bid from Microsoft Corp. or Samsung Electronics Co. Ltd. or another foreign rival.
In the Nortel case, Mr. Balsillie's demand that the patents remain Canadian was far from unalloyed patriotism. His company was excluded at the time from auction of patents by the overseers of Nortel's liquidation, and he wanted in.
The government in the end let the commercial process play out apparently unhindered.
BlackBerry, as it turned out, managed to join the bid group that eventually won the auction for the patents. The bid group had plenty of foreign content, too, including Apple Inc. and Microsoft. With few restrictions on who could bid, the auction pitted that group against another that included Google Inc. The sale was a huge success, bringing in $4.5-billion, far more than expected – money that accrued to investors in Nortel bonds.
That was far from a happy ending for Nortel. But it was much happier than it could have been had the government stepped in waving the flag, and demanding a made-in-Canada answer.
(Boyd Erman is a Globe and Mail Capital Markets Reporter & Streetwise Columnist.)
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