Canada cracks down on foreign takeover bids, citing the trade crisis

Canada pledged on Wednesday to restrict foreign companies' ability to conduct "predatory takeover" bids, citing concerns that recent trade turmoil could reduce the value of its domestic firms.

The announcement was made by Innovation Minister Francois Philippe Champagne a day after U.S. president Donald Trump began a trade war with Canada and Mexico.

According to the Investment Canada Act (IC Act), Ottawa has the power to approve or reject mergers, acquisitions and other transactions based on the net benefits they bring the country. Champagne said that from now on investments will be examined to determine if they could undermine Canada's national security, at a time of unprecedented economic challenges.

Champagne stated in a press release that "as a result a rapidly changing trade environment, certain Canadian businesses may see their valuations decrease, making them vulnerable to opportunistic and predatory investment behaviors by non-Canadians."

It would be counter-productive to Canada's interest to let these businesses fall victim to such behavior.

He didn't give any details. The government warned the mining industry in July that major deals involving the producers of critical minerals for the country would only be approved "in the most exceptional circumstances".

Ottawa will introduce stricter national security assessments of foreign investment proposals in sensitive sectors by March 2024 to allow it to identify potentially problematic deals. (Reporting and editing by Andrea Ricci; David Ljunggren)

(source: Reuters)