Canada blocks sale of space tech firm

TORONTO - Canada confirmed Friday its decision to block a U.S. company's takeover of the space and satellite division of MacDonald, Dettwiler and Associates Ltd., Canada's leading space technology firm.

Industry Minister Jim Prentice first turned down the $1.3 billion takeover bid last month for Vancouver-based MDA's space division by Alliant Techsystems Inc., a U.S.-based munitions and rocket component maker.

Alliant Techsystems had 30 days to appeal the decision and the deadline passed Thursday.

It is the first time Canada has rejected a foreign takeover outright in the 19 years since the Canada Investment Act took effect in 1989. The U.S. and Canada are key trading partners.

Prentice said the sale of MDA's taxpayer-subsidized space and satellite division would not benefit Canada.

MDA is the builder of Canadarm, the robotic limb used on the space shuttle and on the International Space Station.

It also built the Radarsat 2 satellite that allows the government to monitor ships and submarines in Canada's Arctic — the only such satellite Canada has.

"I have confirmed my initial decision that I am not satisfied that ATK's proposed acquisition of the Information Systems Business of MDA would likely be of net benefit to Canada," Prentice said in a release.

Alliant Techsystems said in a statement on its web site that it was "disappointed" that Prentice disapproved of the sale.

The company, based near Minneapolis, said it will take a $6.6 million pretax charge for transaction-related expenses on the failed deal.

"While ATK is disappointed that the MDA acquisition did not close, the company will continue pursuing a disciplined capital deployment strategy that includes strategic acquisitions, debt repayment and share repurchases," the defense contractor said.

Alliant Techsystems shares fell $1.74 to $110.33 in afternoon trading Friday.

Alliant and MDA had argued that the sale of the space unit would give the division access to more lucrative contracts, especially in the United States.

Only hours after confirming the blocked sale, Prentice announced a major contract Friday between MDA and the Canadian Space Agency.

Prentice said the government has awarded a four-year 109 million Canadian dollars (US$108 million) contract extension that will have MDA continue to provide logistics and engineering and technology services for the Canadian-made Mobile Servicing System on the International Space Station.

Prentice said earlier this week in Washington that he anticipated MDA would continue to be part of Canada's "vibrant space program."

Canada and the U.S. have one of the largest trade relationships in the world.

Prentice made a point Friday of saying that foreign investment is welcome in Canada.

"Foreign investment plays an important role in the Canadian economy," Prentice said.

"However, where a significant transaction does not demonstrate net benefit to Canada, it cannot be approved under the Investment Canada Act."

Prentice received a standing ovation in Parliament when he first announced the decision last month.

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