Canada blocks sale of top space company to US firm: minister

Canada's industry minister confirmed Friday he is blocking the sale of leading space firm MacDonald Dettwiler and Associates to a US defense contractor, saying it provided no net benefit to Canada.

Industry Minister Jim Prentice first announced last month that he would block the proposed sale of MacDonald Dettwiler (MDA) to US firm Alliant Techsystems (ATK), amid fears the future of Canada's space industry, national security, and even its Arctic sovereignty could be jeopardized.

Under Canadian law, ATK had 30 days to appeal the decision.

In a statement Friday, Prentice said: "I have confirmed my initial decision that I am not satisfied that ATK's proposed acquisition of the Information Systems Business of MDA would likely be of net benefit to Canada."

Prentice underscored that "foreign investment plays an important role in the Canadian economy."

However, he added, "because this transaction would not demonstrate net benefit to Canada, it cannot be approved under the Investment Canada Act."

It is the first time Canada has nixed a foreign takeover since the law was enacted in 1985.

The sale of MDA, builder of the robot Dextre at the International Space Station, to ATK for 1.3 billion dollars was announced in January.

Since then, two MDA engineers quit in protest over the sale and another testified to a parliamentary committee on behalf of 12 employees opposed to the sale.

They argued that MDA's powerful observation satellite Radarsat-2, launched in December with 445 million dollars in Canadian government funding, and a key tool in mapping and keeping an eye on the Arctic, would be lost to Canadians.

Canada is at odds with the United States, as well as Russia, Denmark, and Norway over 1.2 million square kilometers (460,000 sq. miles) of Arctic seabed believed to hold 25 percent of the world's undiscovered oil and gas reserves.

Proponents of the deal, including MDA executives and shareholders, said the firm might lose out on lucrative US contracts if it does not complete the sale to ATK.

In addition to Dextre and Radarsat-2, the Richmond, British Columbia-based company also developed the space robotic arm Canadarm used by NASA.

Dextre was only successfully installed on the international space station mid-March, after a few glitches.

© 2008 AFP

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