Is Everything Sacred in Canada? A Protectionist Country Blocks Two More Big Deals.

Agenda-Setting Financial Insight.
Oct. 21 2012 11:01 AM

Is Everything Sacred in Canada? A Protectionist Country Blocks Two More Big Deals.

Hands off, eh

Photo by S. Badz/Getty Images

Is everything sacred in Canada? At first it was a hole in the ground. Then it was the stock exchange and a DIY chain. This week, regulators blocked two more big deals, including a $5.2 billion bid for Progress Energy by Petronas of Malaysia. Taken as a whole, these actions signal the market for corporate control in Canada - especially when it comes to foreign buyers - is effectively closed.

The definition of industries worthy of protection has become incredibly expansive. Fertilizer producer Potash was judged too important for the Saskatchewan economy to let slip into the hands of Australian miner BHP. The Toronto Stock Exchange was deemed a national champion that needed to retain its independence.

This protectionist instinct has crept with French-like stealth into sectors hardly in the realm of national economic security, like the home improvement business. A proposed takeover by the American chain Lowe’s of Rona, its struggling Canadian rival, was scuttled by opposition from Quebec’s finance minister, local politicians and large stakeholder Caisse de Dépôt et Placement du Québec.


So it’s no surprise the number of Canadian mergers and acquisitions in the third quarter fell 21 percent when compared to the same quarter last year, according to PricewaterhouseCoopers. With so many proposals getting torpedoed an inevitable chilling effect appears to be gripping boardrooms.

No company wants to spend months and many millions on a transaction that’s likely to be shut down. And Canada’s multiple regulators on the provincial and federal level add to the uncertainty. To wit, on Thursday the Radio-television and Telecommunications Commission blocked the acquisition of Astral Media by BCE, arguing the merger would not be in the public’s interest.

This is not just bad news for Bay Street’s investment bankers. It may hurt all Canadian shareholders, as they are denied takeover premiums for their holdings, or must forgo the synergies that might result from consolidation.

The Petronas deal, in particular, may be an ominous sign for CNOOC’s $15.1 billion offer to buy oil sands producer Nexen. Though it is just the nation’s 24th largest energy producer and most of its operations lie overseas the bar for meeting the Investment Canada Act’s “net benefit” test just went up. Canada, it appears, is no longer quite so open for business.

Read more at Reuters Breakingviews.


Sports Nut

Grandmaster Clash

One of the most amazing feats in chess history just happened, and no one noticed.

The Extraordinary Amicus Brief That Attempts to Explain the Wu-Tang Clan to the Supreme Court Justices

Amazon Is Officially a Gadget Company. Here Are Its Six New Devices.

Do the Celebrities Whose Nude Photos Were Stolen Have a Case Against Apple?

The NFL Explains How It Sees “the Role of the Female”

Future Tense

Amazon Is Now a Gadget Company


How to Order Chinese Food

First, stop thinking of it as “Chinese food.”

Scotland Is Inspiring Secessionists Across America

The Country Where Women Aren’t Allowed to Work Once They’re 36 Weeks’ Pregnant

The XX Factor
Sept. 18 2014 11:40 AM The Country Where Women Aren’t Allowed to Work Once They’re 36 Weeks’ Pregnant
Sept. 17 2014 5:10 PM The Most Awkward Scenario in Which a Man Can Hold a Door for a Woman
  News & Politics
Sept. 18 2014 3:19 PM In Defense of Congress Leaving Town Without a New War Vote
Business Insider
Sept. 18 2014 3:31 PM What Europe Would Look Like If All the Separatist Movements Got Their Way
Sept. 18 2014 3:24 PM Symantec Removes Its “Sexual Orientation” Filter
  Double X
The XX Factor
Sept. 18 2014 3:30 PM How Crisis Pregnancy Centers Trick Women
  Slate Plus
Behind the Scenes
Sept. 18 2014 1:23 PM “It’s Not Every Day That You Can Beat the World Champion” An exclusive interview with chess grandmaster Fabiano Caruana.
Sept. 18 2014 4:00 PM When The Cosby Show Got “Very Special” Why were The Cosby Show’s Very Special Episodes so much better than every other ’80s sitcom’s?
Future Tense
Sept. 18 2014 2:39 PM Here's How to Keep Apple From Sharing Your iPhone Data With the Police
  Health & Science
Sept. 18 2014 3:35 PM Do People Still Die of Rabies? And how do you know if an animal is rabid?
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.