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Stock Ideas Investors Daily Edge Let the Deal Go Down
Stock Ideas Investors Daily Edge Let the Deal Go Down 
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| Let the Deal Go Down |
| Wednesday, 10 October 2007 | ||||||
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Prime Minister Stephen Harper confirmed last week that his minority Conservative government will address issues regarding foreign acquisitions of Canadian assets involving state-owned enterprises, but also said the proposed takeover of PrimeWest Energy Trust by the Abu Dhabi National Energy Co, or TAQA, would be reviewed under existing rules, as set out in the Investment Canada Act. As part of its look at the Investment Canada Act, Harper told reporters that Canada will look to ensure there’s a national security clause as part of its foreign investment review practice. He was adamant that any reforms would not “feed protectionist sentiment.” Industry Minister Jim Prentice will establish guidelines for acquisitions by state-owned companies, including an explicit test to determine whether a takeover is detrimental to national security. Prentice said the government already has the power under the Investment Canada Act to take into account issues of state ownership and governance when reviewing a foreign takeover, but noted that Canada was the only major industrialized nation not to have an explicit national security test when reviewing foreign takeovers. In the wake of the income trust tax, new climate change legislation and Alberta’s consideration of increased royalty rates, the oil and gas sector responded with alarm to Prentice’s initial statements on Ottawa’s review of the TAQA deal. The perceived threat to the PrimeWest/TAQA deal was understood initially as one more drag on share prices. Prentice later reiterated that the government was eager to attract foreign investment to Canada, including that of foreign state-owned companies that operate transparently and according to market principles. Harper’s statement further eased concerns. TAQA has said it plans to spend USD20 billion in Canada, but that’s just a fraction of the total amount of petrodollars floating around. McKinsey & Co reported last week that there’s about USD3.8 trillion in petrodollars looking for an investment home; that figure could reach USD5.9 trillion by 2012. Given the amount of capital to be potentially deployed, Harper and Prentice had to make TAQA and its peers feel welcome in Canada. Source Excerpted : Maple Leaf Memo This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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