In an interview with Reuters, Prime Minister Stephen Harper hinted that the Canadian government might step in and block a foreign takeover of Research in Motion, stating that he wanted to see RIM “grow as a Canadian company”.
Though the Prime Minister avoided any direct speculation or commentary on how the government might react if a foreign bid were to materialize, he did question whether hostile takeovers of “critical technology” firms are in the country’s best interests.
“I can’t make comments to you that would prejudice any kind of a bid, especially one that is completely hypothetical and may not happen,” Prime Minister Harper told Reuters in response to a question about a possible foreign bid for RIM.
“Takeovers of critical technology that the government’s invested in, or … hostile takeovers of key Canadian businesses, are obviously something that I think is widely understood is not in this country’s interest.”
“But RIM, as you know, is a strong Canadian company. It’s been an important part of the Canadian business landscape, and obviously we want to see that company succeed and continue to grow as a Canadian company.”
In 2008 the Harper government used the Investment Canada Act to block the attempted to purchase of Vancouver-based military contractor MacDonald Dettwiler and Associates (MDA) by an American firm.
In addition to developing the Canada Arm, MDA provides Unmanned Ariel Vehicles for the Canadian Forces and other NATO countries. MDA has also built classified imaging satellite ground systems for use by the Canadian government in arctic surveillance.
Todd Coupland, an analyst at CIBC World Markets, believes that a hostile bid for RIM would be difficult, even without Ottawa potentially nixing the deal.
“People are the lifeblood of that company, it isn’t just hard assets. Making a hostile bid in technology and intellectual capital like that is going to be very, very tricky,” Mr. Coupland told Reuters.
Terry Beech, an Adjunct Professor at Simon Fraser University’s Faculty of Business, and CEO of HiretheWorld.com, agrees with Mr. Coupland that RIM’s value is in its human capital, but doesn’t agree with the Prime Minister that RIM is potentially a strategic asset to Canada.
“The value of RIM is highly intellectual, which means you’re only really as good as the quality of your patents and the quality of your people,” Mr. Beech told Hardware Canucks in an earlier article.“RIM stock is falling for a reason, and there isn’t much the government will be able to do about it.”
“Unlike Potash, Oil or Gold, the Government of Canada has no mechanisms to control the underlying value of RIM.”
It is also widely speculated that the Conservative government is considering easing restrictions on foreign ownership of telecommunications companies, though Prime Minister Harper declined to talk about the issue with Reuters.
RIM’s stock closed Friday on the TSX at $16.78, down 2.3%.