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A few weeks after Alliant Techsystems announced plans to buy the space divisions of Canada's MacDonald Dettwiler and Associates Ltd., executives from the companies were at an aerospace industry reception at Ottawa's Rideau Club, along with dozens of Tory MPs. The executives saw no movement to quash their deal.

"It was a love-in," one person close to the deal said regarding the Feb. 4 meeting. "You figure, everything's okay. No controversy here."

If they had read a speech that Industry Minister Jim Prentice had given four months before, they might have worried more.

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He had already signalled that he wanted to start flexing government muscle to stop deals that might affect Canadian sovereignty and national interests, in a speech to Vancouver's Board of Trade Oct. 9.

"Canada is open for business, but it's not for sale," Mr. Prentice said then. "And like other countries around the world, it's important that we have safeguards in place to protect our interests."

His thoughts then were not on space companies, but on state-owned enterprises from countries like China, who have eyed takeovers of Canadian resource firms and, it is feared, might use them to support their supply chain rather than build a successful business.

Mr. Prentice noted that the U.S. can block deals in the name of national security, critical infrastructure and key technology: "Canada asserts no less a right," he said.

When Alliant and MDA sleepwalked into a storm about how the sale of MDA's space business and satellite technology affected Canada's sovereignty, a mix of political considerations and Mr. Prentice's nationalist bent killed their deal.

MDA's space divisions, Canada's largest space business, own the Radarsat-2 satellite that can spot ships sailing in Canada's Arctic waters and the technology for the next generation of Canadian satellites.

Few doubt the deal would have had a different review under Mr. Prentice's laissez-faire predecessor, Maxime Bernier.

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"This is very much Jim Prentice," said one official close to the minister. "This is where he's at."

Those feelings were echoed in a speech he made yesterday at the Canadian Space Agency, where he mentioned intellectual property as a criterion for protection.

"We need to own our technology and the intellectual property that comes with it," he said.

The Conservative government's cheering of the decision to reject the deal makes it unlikely it will change its mind, but under the law Alliant has 30 days to make new arguments.

Alliant executives are to meet with Industry Canada officials Monday, and a source said they still harbour a hope they can satisfy the government by making legal arrangements so intellectual-property rights for Radarsat-2 stay in Canada, to be used only in ventures involving a Canadian subsidiary.

But it is now a faint hope, and some who followed their efforts to win approval say they misread the forces lining up against them.

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The companies initially tried to "low-bridge" their campaign by keeping a low profile, hoping it would not trigger controversy, rather than selling it to the public, according to a source close to the efforts.

"They didn't want to wake up the giant. [Then]all of a sudden, you've got a red-hot issue," the individual said.

Tory backbencher Art Hanger, a space-industry enthusiast, questioned the deal in public and other Conservative MPs also began doing so. Media and public attention grew. Tory MPs started getting questions from Conservative supporters about the $445-million in government contracts that paid for the development of Radarsat-2. There were comparisons to the Avro Arrow.

In mid-March, the tide turned, and questions about whether U.S. security laws would give that country control of satellite data about Canada's Far North raised the spectre it might be used against Canada's contested claims in the Arctic. That image conflicted with Prime Minister Stephen Harper's high-profile vow to protect Canada's sovereignty in the Arctic, and made it a key political plank.

"The whole Arctic issue played an important role in this," one Conservative MP said.

Both Alliant and MDA countered those claims in late March, insisting that the satellite data were handled by the Canadian Space Agency, and under the control of Canadian law. But MPs were skeptical, and it appeared public opposition had already hardened.

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Mr. Prentice, meanwhile, never tipped his plans to his own caucus, but his previous signals on the review of takeovers had provided hints: "People missed that," one Conservative said. "But I don't see how."

With reports from Tu Thanh Ha in Montreal and Wendy Stueck in Vancouver

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