OTTAWA/TORONTO (Reuters) - A senior Canadian minister was prepped to discuss foreign investment rules with Research In Motion’s new CEO in a March telephone call, mindful of intense takeover speculation that’s still swirling around the embattled BlackBerry maker.
Internal documents obtained by Reuters show that aides to the industry minister - who has the power to block foreign takeovers - were closely tracking reports of a possible bid for RIM, a national icon that is now struggling to survive.
Briefing notes for Industry Minister Christian Paradis and other correspondence obtained under access to information legislation showed RIM’s falling share price and worsening business profile are clearly on the radar of Prime Minister Stephen Harper’s Conservative government.
But the heavily redacted documents stop short of revealing any particular government bias with regard to a potential bid.
Instead, the minister was urged to tell RIM CEO Thorsten Heins: “I examine proposed investments on a case-by-case basis and make my decisions based on the facts and merits of each proposed investment...”. Canadian law requires foreign takeovers to bring a “net benefit” to the country.
Even though Paradis was ready for it, Heins never raised the subject of a possible takeover during the call, a source familiar with the discussion said. The notes advised the minister to address the issue only if Heins raised it.
Their conversation in late March - a few weeks after Heins took the helm at RIM - is the only one the pair have had to date, according to a source familiar with the discussion.
Soon after they spoke, RIM reported a quarterly net loss and its first slump in BlackBerry smartphone shipments for a holiday quarter since 2006.
The briefing notes still praised RIM as a “Canadian success” and said Ottawa wanted the BlackBerry maker to remain a world leader.
RIM’s decline has gathered pace since March as its aging line-up of BlackBerry phones loses more ground to snazzier devices such as Apple Inc’s iPhone and others that run on Google Inc’s Android operating system.
As the company has shed thousands of jobs and fears around RIM’s demise have escalated, the market has been flooded with a barrage of speculation about a foreign takeover, or a break-up and sale of RIM’s valuable network and patent assets.
RIM, whose shares have fallen nearly 90 percent in the last year and a half, has said it is reviewing its options, including potential partnerships, joint ventures or even a possible sale.
The company declined to comment on the conversation between Heins and Paradis.
The Industry Ministry has the final say on every major takeover of Canadian assets by a foreign company. It has twice blocked deals, including BHP Billiton Plc’s $39 billion bid for fertilizer maker Potash Corp.
The foreign investment law requires the minister to look at the effects of a proposed deal on economic activity in Canada.
RIM’s impact on the Canadian economy is concentrated in its home base of Waterloo, Ontario where it is the largest employer, officials noted in their memos. But they also said very few Canadian technology companies were RIM suppliers.
When asked for further comment, Paradis said in an email: “Research in Motion has made an important contribution to information and communications technology in Canada, a sector that is so important to the Canadian economy. We hope they continue to do so well into the future.”
On Thursday afternoon, RIM’s Nasdaq-listed shares were little changed at $7.53, less than a dollar above their year low of $6.56.
Additional reporting by Randall Palmer and Alex Paterson; Editing by Janet Guttsman and Frank McGurty