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Blog: The tit-for-tat politics of foreign takeovers

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BEST OF BNN: December 10 is shaping up to be a critically important day for the future of Canada’s resource sector.

That is the day Ottawa is widely expected to issue a decision on whether to allow Chinese state-owned CNOOC Ltd. to buy Calgary-based Nexen Inc. for $15.1 billion, though technically the decision could come down anytime before then (possibly even while you’re reading this blog). We already know the ruling that will be handed down from Industry Canada will in many ways dictate the level of foreign investment Canada will receive to help develop its vast natural resources -- Alberta’s oil sands in particular -- at a globally competitive rate.

But this morning came news that December 10 might also be the day (or again, any moment between now and then) when Canadians will learn just how much freedom they will have to do business abroad. The Chinese Ministry of Commerce is the sole remaining regulatory hurdle which Glencore International Plc must clear before it can complete its $6.1-billion takeover of Regina, Sask.-based grain handling giant Viterra Inc. The transaction has the future of another Calgary-based company – Agrium Inc. – hanging in the balance as the Glencore deal includes having Agrium pay $1.8-billion for Viterra’s 250 retail outlets.

Beijing was originally expected to approve the Glencore deal, largely seen as a rubber stamp considering Viterra’s extremely modest Chinese footprint, in time for the planned November 15 closing date.

That is no longer possible, Viterra said Friday, because the Chinese government is delaying its decision on that takeover just as the Canadian government has delayed its decision of the Nexen takeover. So what is the new deadline? You can probably guess: December 10.

Call it coincidence if you want, but it speaks to the kind of tit-for-tat politics Canada is being forced to play if it wants to do business on the world stage. Ottawa shocked investors in 2010 when it decided to block Australian mining giant BHP Billiton’s nearly $40-billion hostile takeover bid for Potash Corp. of Saskatchewan, invoking the ambiguously defined "net benefit" clause of the Investment Canada Act for only the second time since 1985 when it first became law.

So when the Israeli government expressed reservations last week about Potash Corp.’s bid for Tel Aviv-based Israel Chemicals Ltd., nobody seemed surprised, even though the Canadian company already owns a 14-percent stake in its Israeli competitor.

The message here seems clear: If Canada wants its domestic companies to be able to expand through acquisitions abroad, it must be prepared to allow companies based abroad to expand through acquisitions here as well.

Canada is open for business; Prime Minister Stephen Harper has made that overture unequivocally and constantly. What the world still needs to know, however, is which sections of this country’s store of companies are open only to passport-carrying Canadians (i.e. banking and telecom) and which sections are open to everyone.

That separation should be made clear by December 10 and whatever Ottawa decides by that day, Canadians can rest assured it will determine just how open the rest of the world will be to Canadian business as well.

Watch your calendars closely because starting Friday, 30 days remain when at any point, all the dominoes could fall.

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