Midterm 2008 Summer - Luara

Midterm 2008 Summer - Luara - MacDonald Dettwiler and...

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MacDonald Dettwiler and Associates Ltd. (MDA) by Alliant Techsystems zinc. (ATK) is the first time that the Canadian government blocked f reign takeover since the /"Ill& Canada Investment Act took effect in I 989. ~h&& are many reasons why the Canadian government should allow MDA to be taken over by the U.S firm, Alliant Techsystems Inc. Firstly, the sale of MDA's space and satellite division helps MDA to access more of the U.S1s markets. According to Alliant and MDA, "the sale of the MDA1s space unit would give the division access to more lucrative contracts, especially in ,the Ur~ited ~tates".' Since September of 2001, the Buy America Act makes it difficult for foreign firm to do business with the U.S government and the Q entagon.' Secondly, MDA can use the proceeds from the sales to expand o other bus esses. For example, uF ,J '- according to the Canadian Pres money from the sale of the space division to finance other bu property data that it sells to real estate, government and other customers around the world.3 Finally, this deal can best serve the interests of MDA's shareholders and employees because it guarantees the company more work in the future. However, there are many reasons government syd bloc foreign takeover. The first main reason to block the transaction is the concern about Canada's sovereignty and national security. The Radarsat-2 technology is an important tool to protect Canadian's sovereignty. The federal government fears that "the foreign 1 "Space Station deal for MDA." THESTAR.COM 9 May.2008.2 June. 2008 <http://www.thestar.com/printArticle/423520> 2 "The Folly of Meddling." Canadian Business 12 May. 2005: 5 Space Station deal for MDA." THESTAR.COM 9 May.2008.2 June. 2008 Ud <httrs://www.thestar.corn/rsrintArticle/423520>
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ownership of Radarsat-2 could result in U.S goverr~nient to prevent Alliant from deliverer critical satellite data to Canadian g~vernrnent".~ Canada could lose the control of the Radarsat-2 satellite that can maintain Arctic sovereignty. The second reason is the loss of the Canadian taxpayers funded technology. Since Canadian taxpayers funded 80% of the cost of development of the Radarsat-2 government would lose this technology by handing it over to the U.S firm. The industry Minister Jim Prentice has confir initial decision that he is not satisfied that the investment is "likely to be of net benefit to Canada" which is under the lnvestment Canada Act (ICA). He also added, "Foreign investment plays an irr~portant role in the Canadian economy, adding that foreign investors bring with them capital, knowledge, capabilities and technology that can increase the productivity, efficiency and competitiveness of Canadian firms. However, where a significant transaction does not demonstrate net benefit to Canada, it cannot be approved under the lnvestment Canada ~ct,"~ According to the lnvestment Canada Act (1 985), it states: "Recognizing that increased capital and technology would benefit Canada, the purpose of this Act is to encourage investment in Canada by Canadians and non-Canadians that contributes
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This document was uploaded on 10/25/2011 for the course LAPS adms1010 at York University.

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Midterm 2008 Summer - Luara - MacDonald Dettwiler and...

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