Walid Hejazi is associate professor of international business at the University of Toronto’s Rotman School of Management.
Remember 2010, when the Canadian government blocked BHP Billiton’s proposed takeover of Potash Corp., ruling that the deal would not provide a net benefit for Canada?
This week’s news of a proposed merger between Agrium Inc. and Potash Corp. reminds us that Ottawa still hasn’t resolved its approach to foreign takeovers. Since any Agrium-Potash deal will be between Canadian firms, it won’t be looked at through the net-benefit lens.
But while there will be benefits in a merger, there will no doubt be job losses. One of the two head offices will be closed or downsized in addition to the potential loss of mining jobs.So why would this merger be met with less opposition than the proposed BHP Billiton takeover? It’s our flawed attitude to foreign takeovers.
With exceptions for national security concerns, the worst public-policy approach is to protect Canadian companies from foreign competition. By exposing Canadian companies and industries to foreign competition, these companies are forced to compete and to adopt the newest and most innovative techniques.
We must have faith that our companies can compete on a global scale – there is enormous evidence that the Canadian industries that are most open to foreign investment are also the most competitive and productive.
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