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future foreign takeover. "You end up dealing with two different governments with slightly different agendas, and you have to make both of them happy," says Douglas New of Fasken Martineau DuMoulin LLP's Toronto office. He adds this is nothing new for those familiar with foreign takeovers, but the BHP deal magnifies its relevance to future foreign takeover bids. Of course, BHP isn't the only foreign company to face a rejected acquisition offer in Canada. In 2008, Jim Prentice, who was then industry minister, denied a proposed $1.3-billion acqui- sition of the information systems seg- ment of Richmond, B.C.'s MacDonald Dettwiler and Associates Ltd. by Alliant Techsystems Inc. of Minneapolis, Minn. While the reasons for that decision were also not made public, it is believed the rejection was based on national secu- rity concerns. The deal would have seen the U.S. company take hold of satellite imaging and space technology viewed as key to Canada's national interest. Regardless, Prentice's decision in the { fine for every day the company failed to adhere to the undertakings. In June 2010, the Federal Court of Canada rejected U.S. Steel's contention that s. 40 of the ICA is unconstitutional. The U.S. Steel sanctions were likely on BHP's mind when it issued its own undertakings in the PotashCorp bid. The Australian company offered the In one way or another, there are foreign investment restrictions in a lot of countries. SANDY WALKER, Fraser Milner Casgrain LLP MDA bid was interpreted as an indi- cation the Canadian government was stiffening against foreign ownership of certain enterprises. That view grew when Clement used s. 40 of the ICA in July 2009 to sue United States Steel Corp. for allegedly failing to live up to agreements it made during the acquisi- tion of Stelco Inc. The Pittsburgh, Pa., integrated steel producer had made 31 undertakings when it took over the Hamilton, Ont., company in 2007. Included in those were guarantees to maintain employment and production levels, which the company was unable to justify failing to live up to, Clement ruled. He went on to issue a $10,000 Canadian government commitments it described as "unparalleled in substance, scope, and duration." Those under- takings included an additional $450 million in exploration and develop- ment over the next five years; forego- ing entitled tax benefits; remaining a member of Canpotex for five years; bringing 200 new jobs to Saskatchewan and Vancouver; increasing overall employment at its potash facilities by 15 per cent over five years; placing Canadians in senior management posi- tions; listing BHP on the Toronto Stock Exchange; and providing the govern- ment with a $250-million performance bond. "Those undertakings were cer- tainly beyond anything I'd ever seen. In spite of that, it was turned down," says Paul Mingay, national leader of Borden Ladner Gervais LLP's public mergers and acquisitions group. The bottom line is that investors want to know whether the BHP rejection truly signals a shift in approach by the federal gov- ernment, he adds. Most would like to see a review that answers that question and makes way for more transparency in the investment act review process. "We know there are a number of factors that need to be con- sidered, but there's nothing in the act to say how the factors are weighed, or how you actually get yourself over the line in terms of satisfying those tests," says Mingay. Yet that review did not seem forthcoming by late 2010. A spokes- woman for Industry Canada would not confirm that Clement intends to issue further clarification on his rea- sons for rejecting the PotashCorp take- over, despite an earlier commitment to do so. The federal New Democratic Party managed to pass a motion in Parliament in November calling for a review of the act, but it remains unclear what that process would look like if it comes to fruition, and how it would differ from the extensive 2008 foreign investment review led by former BCE Inc. president and CEO Lynton Wilson. INHOUSE FEBRUARY 2011 • 23