| OTTAWA, Sept 24
OTTAWA, Sept 24 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
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
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
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
But the Investment Canada Act kicks in if there is foreign
"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."