In an unprecedented move, the federal government has blocked the $1.3-billion sale of the space technology division of Vancouver-based MacDonald, Dettwiler and Associates to a U.S. firm.
In a letter this week to Alliant Techsystems Inc., Industry Minister Jim Prentice said he is not satisfied the sale will be a net benefit for Canada, the minister confirmed Thursday.
Alliant has been given 30 days to state its case to win approval for the sale.
MDA wanted to sell its space division, which includes Canadarm, Dextre and the Radarsat-2 satellite, to Minneapolis-based Alliant, a major U.S. defence contractor.
Critics of the sale, including former Canadian Space Agency head Marc Garneau, had called on Prentice to block the deal, saying it handed over taxpayer-funded technology and, in the case of Radarsat-2, gave away technology designed to protect Canada's sovereignty.
Alliant had said that if the deal went through, it would honour all of MDA's existing contracts with the Canadian government, including "access protocols" to Radarsat-2 in the event of a national emergency.
On April 8, the House of Commons foreign affairs committee agreed to hold hearings on the proposed sale.
Prentice had until April 19 to issue a ruling on Alliant's bid for the space business. He was originally due to make a ruling by March 22, but delayed his decision by several weeks.
The government's formal blocking of the deal is extraordinary. In the 23-year history of the Investment Canada Act, the federal government has never blocked a foreign takeover because of a failure of the "net benefit" test.
In that time, Ottawa has approved 12,801 foreign takeovers, according to figures from Industry Canada.
MDA shares tumbled more than nine per cent in morning trading on the TSX — down $4.33 to $42.52. That was what MDA shares were trading for just before the sale of its space unit was announced in January.
