Canada to set 2-track system on foreign bids -report

Wed Oct 24, 2012 8:22am EDT
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Oct 24 (Reuters) - A newspaper said on Wednesday that Canada plans to sharpen its policy on takeovers of domestic companies by foreign corporations by setting out special conditions for deals proposed by state-controlled entities.

Federal government officials could not be reached immediately to comment on the report in the Globe and Mail newspaper.

At its heart the policy would outline a two-track system for judging whether a foreign takeover provides a "net benefit" to Canada, the paper said, citing senior government sources who were not identified in the report.

One track would pertain to transactions involving typical corporations, the report said, and the second to entities deemed to be under the influence of foreign governments.

Under the Investment Canada Act, the government must certify that any sizeable takeover of a Canadian company by a foreign bidder would bring a "net benefit" to the country. But the criteria for passing or failing the test remains vague.

"The government is working its way toward clear criteria for applying the net-benefit test to proposed acquisitions by state-owned enterprises," a government source told the Globe and Mail.

"This is a delicate issue that we need to get right," said the source.

Canadian Prime Minister Stephen Harper said this week that the government intends "to put out a clear, new policy framework regarding these sorts of transactions."

The move comes in the wake of a pair of massive bids for Canadian energy companies by state-owned entities.   Continued...