Canada to offer more insight on blocked deals

Fri Apr 27, 2012 8:22pm EDT
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By Euan Rocha

(Reuters) - The Canadian government said on Friday it intends to make its reviews of foreign takeovers more transparent, by stating when it has reservations about a deal and perhaps even going so far as to provide details about its concerns.

The move comes as a nod to those who have complained about opaque rules that allow the government to block takeovers that it does not think will provide a "net benefit" to Canada.

Canada, which traditionally bills itself as being open to investment, shocked the international business community when it vetoed Anglo-Australian miner BHP Billiton's $39 billion hostile bid for fertilizer giant Potash Corp in 2010.

"The amendments would allow the minister (of industry) to disclose publicly the fact that he has sent a preliminary notice to an investor that he is not satisfied that the investment is likely to be of net benefit to Canada," the government said in a statement.

The change would also allow the minister to publicly explain reasons for sending the initial rejection notice, as long as this does not cause harm to either the Canadian business or the investor.

The move is seen as a direct response to lingering questions raised by the quashing of the BHP bid for Potash Corp.

"This is really just a reaction to BHP," said Oliver Borgers a specialist in competition law at McCarthy Tétrault LLP in Toronto. "This change creates an opportunity for the minister of industry to explain the initial rejection."

As Canadian law stands, once the minister issues the initial rejection, the bidder has 30 days to scramble to change the minister's mind. If at the end of that period, the minister still feels the deal ought to be rejected, then the minister has to provide reasons for the rejection.   Continued...