Foreign companies buying up Canadian corporations

Ron
Ron Walter
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A trend to foreign takeovers of major Canadian corporations has raised concerns in some political and business forums.
The list of companies acquired by foreigners has included some Canadian icons.

A trend to foreign takeovers of major Canadian corporations has raised concerns in some political and business forums.
The list of companies acquired by foreigners has included some Canadian icons.
INCO, the nickel mining and refining giant with a century of history behind it, is owned by a brash upstart Brazilian mining company.
Falconbridge, Inco's main competitor in Canada, fell to a Swiss-based nickel company built by acquisitions.
Another nickel miner, Lionore will fall in a bidding war between the Russians and that Swiss-based operation.
Molsons saved itself by merging with the American Coors, but Labatt's was swallowed by a Belgian firm.
Saskatchewan's IPSCO, the big steel maker, fell to Swedes who outbid the Russians.
The list goes on and on.
In nationalist political quarters the reaction has been predictable; Stop the wholesale selloff of our national treasures. The acquisitions open an old debate that has been around since the 1950s.
Canadian government policy since controversial actions by the Foreign Investment Review Agency of the 1980s and the Mulroney Conservative regime has been hands off - a trading nation like us can't stop takeovers, except for banks, telecommunications and media.
The numbers show Canadian investors buy more foreign companies than we lose to takeovers in this global market.
The no-reason-to-worry case has held sway.
A crack appeared in the argument during the 1990s when a cheap Canadian loonie attracted Americans to buy most of the bigger Canadian oil and gas companies.
The potential of job losses as head offices moved to Texas and Colorado raised fears. That job loss didn't happen as oil prices went sky-high.
The fear of head office and high-paying job losses arose once more with last year's nickel takeovers.
Most investors and analysts see nothing wrong, other than hurt to national pride.
The fact that large Canadian icons are lost matters not, simply because the dynamics of market will develop new icons. They point to RIM, the Ontario maker of the Blackberry communication device.
Yet they ignore the loss of technology companies such as JDS and its head office jobs.
From a market perspective, foreign takeovers are not an issue, just part of everyday business.
While Canada lets anybody with the cash buy companies, other countries are pretty fussy about who owns what.
A Brazilian company bought INCO, but any buyer of key Brazilian companies faces a maze of red tape and barriers, or government ownership control.
When Chinese companies wanted to buy the oil company Unocal and when a Middle Eastern operator wanted to buy 12 ports, the U.S. government blocked the sales.
The European Union ensures no takeover ends competition in that sector, often using the law to thwart foreigners like Microsoft.
Will Canada's policies come back to bite us in some way? We won't know until it's too late.
Of course, Canada hasn't much worthwhile left to sell - other than the oilsands, Nunavut and Labrador and parts of the Territories/Yukon.
Foreign corporations are salivating at the prospects of the oilsands. We have something they don't get elsewhere - stable politics, good infrastructure, trained labour and extra low royalties.

Ron Walter can be reached at 691-1264.

Organizations: INCO, Falconbridge, American Coors Labatt IPSCO Foreign Investment Review Agency JDS Unocal European Union Microsoft

Geographic location: Canada, Saskatchewan, Texas Colorado Ontario U.S. Nunavut Labrador Yukon

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