(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.
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.
A spokesman for Prime Minister Stephen Harper declined to comment on the article.
“I will not comment on the accuracy of the anonymously sourced report in question,” the spokesman, Andrew MacDougall, said in an email. He noted that the government has already said it plans to outline a framework to provide greater clarity on foreign takeovers soon.
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.
Malaysia’s Petronas offered C$5.17 billion ($5.2 billion) in June for Progress Energy Resources Corp (PRQ.TO). Last week the government shocked markets by issuing an interim rejection of this takeover on the basis that it was not of “net benefit” to Canada. [ID:nL1E8LK13] [ID:nL1E8LM5ND] Ottawa did not provide specific reasons for determining the proposal failed to meet the “net benefit” test.
China’s CNOOC Ltd’s (0883.HK) C$15.1 billion bid for oil and gas producer Nexen Inc NXY.TO is currently under review.
Reporting by Euan Rocha; Editing by Frank McGurty