Investment Canada’s “net benefit” litmus test for corporate takeovers was supposed to apply to Canada, not the Conservatives.
But Industry Minister Tony Clement sided with party fortunes in Saskatchewan over the country’s freedom of enterprise reputation by vetoing Australia-owned BHP Billiton’s bid to buy Potash Corp. of Saskatchewan on Wednesday.
A pink rock most of us wouldn’t recognize if it fell into our soup is now the hottest political commodity in Canadian history, a resource more important than all the mineral and fossil fuel interests which have ever been extracted from Canadian-controlled ownership before. No natural resource has been afforded this level of government protection from a foreign buyer when the only downside would appear to be political aftershocks.
Nickel, iron ore, oil, natural gas, even beer companies are available for sale to the highest bidder anywhere in the world, but a building block for agricultural fertilizer is officially off limits to foreign buyers unless they buy up the stock one shareholder at a time.
What’s particularly odd is how a fellow Commonwealth country’s corporation is ruled ineligible to buy a mining operation while one Prime Minister Stephen Harper described as “American-controlled” is government-sheltered from a takeover.
Sources had told me Monday there was an internal recommendation to support the bid with strings attached after BHP offered a series of job, investment and executive relocation conditions under government supervision.
They must have been misinformed because Mr. Clement insists Investment Canada, despite being specifically assigned the task of assessing takeover applications for the government’s consideration, did not deliver any recommendation. Then again, perhaps Mr. Clement is talking rubbish.
But, either way, the political calculation to support the takeover became too daunting for Stephen Harper, who has never made a decision that didn’t fixate first and foremost on his party’s payoff at the polls.
He clearly felt his 13 true-blue Saskatchewan seats were vulnerable to electoral loss in a province whipped into a frenzy of takeover opposition by the formerly pro-business government of Premier Brad Wall.
Realistically, the stakes might not have been that high. Had BHP’s offer been implemented as promised, the takeover might’ve appeared more like a homecoming as executives returned to Saskatoon from their current offices in Chicago backed by tax or investment concessions and job guarantees.
Even Premier Wall might’ve had trouble stoking voter anger until the federal election next spring or fall. This is, after all, a province where Conservative MPs were elected with a minimum of 44 per cent of votes cast, one of them cresting at 70 per cent.
While rhetorically over-the-top in his opposition, there’s no denying Brad Wall was extremely successful in whipping up western premiers into a sudden lather against the BHP deal.
It became particularly difficult for Conservatives to ignore the backlash building in their electoral fortress in Alberta and Manitoba.
How this will roll out around the world of global investment remains to be seen and Potash Corp. shareholders may have plenty of reason to be peeved at losing the chance to pocket any proceeds from an improved stock offer.
But this is the clearest example of Mr. Harper acting out of raw political pragmatism with no roots in the right-wing ideology his party allegedly represents.
The fallout means there’s a very blurred line between a red-carpet rollout and a closed door to investment in Canadian companies.
Other resource investors must be wondering on which grounds they’ll face rejection by an Investment Canada which, if Clement is to be believed, can’t actually bring itself to deliver a recommendation for political consideration on a massive takeover bid like the BHP offer.
Suncor should, under these conditions, be preserved forever as Canadian owned, being the second largest company in the country with a strategically vital resource called oil locked in huge untapped reserves.
No matter how this is ultimately sliced and diced, it’s a massive victory for a Saskatchewan premier who now officially walks on water for his voters and could soon achieve a Danny Williams level of rock star status.
The losers, aside from Potash Corp. shareholders who may feel they could’ve pocketed more money under a sweetened offer, are federal opposition parties who were salivating at having the government on the ropes for the rest of the year.
With the Conservatives now marching in lockstep with their opponent’s anti-takeover position in the House of Commons, the Liberals and New Democrats will have to unfurl wild conspiracy theories to attract attention.
Never mind the 30-days pending a final decision. This takeover case is now closed — which means Canada has closed a window to the investment world.
Don Martin: Politics comes first in Potash rejectionIn Canada on November 4, 2010 at 12:13