Space technologies stay in Canada (for now)

Hot off the press from Globe and Mail (April 10, 2 AM EST) "Ottawa rejects space firm's sale to U.S.". (Note: also see my earlier blog entry about this sale and a link to a legal opinion.)

OTTAWA — The federal government has said no to selling Canada's leading space company to U.S. interests, concluding that the deal would not be in the best interests of the country, The Globe and Mail has learned.

Industry Minister Jim Prentice made the decision to issue an initial rejection of the deal on Tuesday, when he wrote a letter to the potential buyer, Alliant Techsystems Inc. of Edina, Minn., that said the takeover of MDA Corp. would not provide a “net benefit” to Canada.

Under Canada's investment-review law, the company has 30 days to make new arguments to the minister, and Mr. Prentice must then confirm his rejection. But Mr. Prentice's move signals his intention to take the unprecedented step of blocking a major corporate takeover, in an issue that has been fraught with controversy as opponents argued that the sale of MDA could impair Canadian sovereignty.

A spokesman for Mr. Prentice, Bill Rodgers, confirmed Wednesday that the note had been sent, but he was unable to provide further details. When contacted by The Globe and Mail Wednesday night, Alliant officials responded with a two-sentence statement that indicated that they are not willing to declare the deal dead. [...]

The proposed sale of MDA Corp.'s Information Systems Unit has raised nationalist sentiment and fears that Canada could lose control of the data from Radarsat-2 in a dispute over Arctic sovereignty. [K: I agree the Radarsat-2 data has an important role in our national interest and won't trust any US companies (which has to follow US government directives in case of national security related issues). At the same time, I reject the unfair negative implication associated with using words like "nationalist sentiment".] Alliant, also called ATK, is a U.S. weapons and space contractor. The systems unit is responsible for most of MDA's operations and 1,900 employees. [...]

Some of the staunchest criticisms came from within the Conservative Party. Tory MP Art Hanger voiced sharp concerns, and Conservatives on the Commons industry committee treated the sale with skepticism.

One Conservative MP, speaking on condition he not be named, said the sale had raised a surprising backlash among Canadians, who saw it as a point of pride being peddled to the United States – which might possibly use it against Canada's claim to Arctic waters.

I think Minister Prentice did the right thing here in rejecting the sale.

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Update: See report by CBC (with video report) and Reuters.