Under the Investment Canada Act, transactions involving foreign takeovers are automatically reviewed if their book value exceeds $312 million and the industry minister has 45 days to determine whether or not to allow the investment.A loophole in this statute (at the moment, in the absence of regulations) driven by company chosen accounting values that both Nortel and Ericsson seek to capitalize upon.
Although the sale of the wireless unit was for $1.13 billion US, Nortel said the book value of the assets was only $149 million US.
In response to Ignatieff, Ericsson Canada Inc. president and CEO Mark Henderson reiterated that the book value of what his company is buying is far below the level that triggers a review. (emphasis added)
Clement is under a cone of silence, they appear to be quietly letting the issue go, with a comic turn from Clement's spokesthingy:
Clement's spokesman, Darren Cunningham, told CBC News on Friday afternoon that by law, the minister was unable to comment on the matter.Really? He's commented throughout, funny he's stopping now. Could be things like this giving the minister a sudden pause:
A new poll of Canadians has found that the country's citizens want the federal government in Ottawa to block the sale of Nortel Networks (NYSE: NT)' CDMA/LTE unit to Sweden's Ericsson.And then there's this, Canadians like their government to actually, you know, do things:
Canadian market researcher Strategic Counsel surveyed 1,000 Canadians and found that 73% of the respondents want Nortel technology to remain in Canada.
Ericsson bid $1.13 billion for the prized Nortel unit, and its offer was much higher than the only other bid -- a $650 million offer made by Nokia Siemens Networks. Research In Motion, headquartered in Ontario like Nortel, has urged Ottawa to block the sale on national security grounds.
The sale to Ericsson, however, is proceeding apace and Canada's Prime Minister Stephen Harper has said he won't block the deal.
...55% of the respondents opposed an outcome in which the federal government would do nothing about the sale of the Nortel assets to Ericsson.Whatever will they do?