RADARSAT-2 sale to be blocked

The government caves in to Canadian nationalist breast-beating:

Federal Industry Minister Jim Prentice confirmed Thursday morning that he has taken the unprecedented step of rejecting the planned $1.3-billion sale of Canada's leading space company to U.S. interests, concluding that the deal would not be in the best interests of the country.

Mr. Prentice's office issued a brief statement acknowledging that, as The Globe and Mail reported, he wrote to Alliant Techsystems Inc. (ATK) on April 8, to advise them that, "based on the information received at this time, he is not satisfied that the proposed sale of MacDonald, Dettwiler and Associates Ltd. (MDA) to ATK is likely to be of 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...

The federal government has never rejected any takeover in thousands of foreign-investment reviews since the Investment Canada Act went into effect in 1989, although it has sometimes extracted concessions before it approved a deal.

Alliant could use its 30-day appeal period to provide new information to Mr. Prentice. And the companies could restructure the deal to meet government concerns.

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. 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.

MPs from all parties have also questioned whether a jewel of the Canadian high-tech space industry should be sold into U.S. hands, and the Canadian Auto Workers union has raised concern for the impact on the industry.

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.

The Radarsat-2 satellite, developed in large part with the guarantee of a $445-million federal contract for satellite data, will be Canada's only eye-in-the-sky capable of spotting a U.S. sub [submerged ?!?], for example, sailing through the Northwest Passage...

But note this from those directly affected:

Union locals and employee associations at MDA plants in Brampton and Montreal were just gearing up a campaign to push Ottawa to approve the sale, arguing that the best way to save their cutting-edge Canadian jobs is through a sale to a U.S. buyer.

They had bought an advertisement scheduled to run in a Parliament Hill newspaper and written to MPs.

Without access to U.S. space contracts, which make up 81 per cent of international space programs, MDA cannot thrive, and international free trade does not exist in the industry [emphasis added].

As Jack MacLeod wrote me in an e-mail:

MDA has a very limited and highly specialized market, if it is not sold it will collapse. Harper and friends have obviously never had to meet a company payroll. MDA know what in hell they are doing and they need fresh money and ideas to establish to markets...

My views are here.

Update: A massive comment thread at the Globe covering all ranges of opinion. Lots of attention to the financial aspects of the situation. "Space Guy", who works for MDA, seems to know what he's talking about.