Declaring the oil sands off limits to further takeovers by foreign state-owned companies is just the kind of rule that one would think would raise hackles among those who depend on making deals for a living. But it isn't.
The rule was dramatically unveiled by Prime Minister Stephen Harper after months of suspense, complete with the longest news conference in some time, giving it all a sense of sweep and heft. In fact, it actually captures only a handful of potential transactions.
Mr. Harper himself pointed out that most of the oil sands is already controlled by only a little more than a dozen companies. They can still be bought, by foreigners. Just not by state-owned enterprises.
To Canadians upset at foreign takeovers, including those who vote for Mr. Harper, the message is that the government knows when to say "enough is enough." Yet deal-making in the oil patch and the rest of Canada is far from dead.
There are still plenty of avenues for foreign capital to flow into the oil sands, including money from state owned enterprises (SOEs), because the government left non-controlling investments as fair game. The likelihood is quite low that the new tough stance on state-owned companies will stretch to other areas of the economy.
There are few state-owned miners, so that sector of Canada's economy is pretty safe. Media, telecommunications and banking are already protected from takeover. And there aren't a whole lot of state-owned retailers or car parts companies or furniture manufacturers out there. Aside from something like a port or a railroad, it's hard to see this coming into play very often.
That reality, along with the approvals that came for takeovers of Nexen Inc. and Progress Energy Resources Corp., means that Mr. Harper's overarching message is that capital from other countries is still welcome in Canada. Message received, according to some deal makers.
"They clearly are signalling by words and deed that foreign capital, including SOE [state-owned enterprise] capital, is still welcome in Canada," said Oliver Borgers, a partner at McCarthy Tetrault in Toronto who works on takeovers, focusing on competition law.
Another dealmaker, this one a banker who works on major cross-border transactions, echoed the sentiment. The fact is that much state-owned enterprise investment in the oil sands is already through joint ventures and other minority, non-controlling stakes. In his view, investment from state-owned enterprises has not been killed, but the companies that want to invest in Canada will have to be more flexible.
Mr. Harper's decision to look at the Progress and Nexen deals under the old rules also buys the Canadian government some credibility with dealmakers. Mr. Harper said he wanted to avoid the appearance that Canada would be "retroactive" and change the rules in the middle of the game. That message, too, found a receptive target among bankers and lawyers.
"It's very encouraging," said Mr. Borgers. "It helps our reputation internationally."
One risk for the government is that SOEs will try to disguise themselves in future, trying to buy control of Canadian assets using supposedly arm's length vehicles or other such dodges. Mr. Borgers said that he will be watching carefully for the definition of a state-owned enterprise.
"What is an SOE," he said. "We'll know it when we see it. [But] it's a hard one to define."