The investor that has struck a tentative $4.7 billion deal to take smartphone maker BlackBerry Ltd private is aggressively touting his group's Canadian status to avoid the government reviews of foreign takeovers that have plagued recent attempts to buy Canadian companies.
The $9 a share proposal, from an as-yet unidentified consortium led by Canadian investment guru Prem Watsa's Fairfax Financial Holdings, was announced on Monday.
That was the first working day after BlackBerry shares dived after the company warned of an almost billion-dollar quarterly loss and announced it was laying off more than a third of its workers.
"Our proposal offers a high level of certainty of regulatory approval," Watsa, chief executive of Fairfax Financial, said in a letter to BlackBerry that described the consortium he is setting up to buy the company as "a Canadian buyer not subject to Investment Canada review" and dismissed the idea of antitrust concerns.
Canadian laws give the government the right to review a range of takeovers, including ones that could threaten national security or put the buyer in an excessively strong competitive position.
The Investment Canada Act says foreign takeovers over a certain size must be of net benefit to Canada, a vague concept that the government used when it blocked the biggest takeover of 2010, the $39 billion bid by global miner BHP Billiton Ltd for Saskatchewan-based fertilizer producer Potash Corp.
Gus Van Harten, an associate professor at Toronto's York University and an expert on the Investment Canada Act, said he assumed Watsa was "referring to this being structured in a way so that it's a Canadian takeover of a Canadian company".
Watsa told the Globe and Mail newspaper on Monday that a significant portion of the money for BlackBerry would come from Canada.
The rejection of the BHP bid, along with a lengthy and painful approval process for takeovers of Canadian energy companies last year by Chinese and Malaysian state-owned enterprises, have prompted questions in the investment community about whether Canada is really open to foreign business.
Billions of dollars were riding on the 2012 energy sector transactions, and although the takeovers were allowed, the outcome was uncertain to the last minute.
As recently as early 2012, Canadian Prime Minister Stephen Harper said he wanted BlackBerry to stay Canadian and opposed hostile takeovers of key Canadian businesses.
The government's view may have softened in light of the grim financial situation BlackBerry is in. Industry minister James Moore declined to comment on Monday.
But a possible Chinese buyer such as Lenovo Corp would still be unlikely to go down well, given the Conservative government's distrust of state-owned enterprises.
"The prospect of a Chinese firm taking over any part of BlackBerry would not be greeted with enthusiasm by this government," a government official, speaking on condition of anonymity, said in August.
Also in August, when Watsa first emerged as a possible bidder for BlackBerry, Industry Canada spokesman Michel Cimpaye said there was no requirement under the Canada Business Corporations Act to seek government approval to take a company private.
But the Investment Canada Act kicks in if there is foreign control.
"The Investment Canada Act applies where a foreign investor acquires control of a Canadian business," Cimpaye said. "Beyond this we cannot offer any further guidance with respect to the specifics as it depends on the facts of each case. The department works with investors on a case-by-case basis."