There are plenty of reasons why the federal government should review the sale of a portion of Nortel Network’s assets to Swedish giant Ericsson, according to a poll of Canadian CEOs by COMPAS Inc.
Ericsson wants to pay US$1.13 billion for key Nortel assets, triggering concerns that Canada is losing valuable IP to a foreign company. Though the sale has been approved by the courts, a parliamentary committee held an “emergency” meeting on Aug. 7 to examine the deal.
The 106 leaders surveyed say the government has every right to consider blocking the sale, largely because of the vast amount of tax dollars poured into Nortel’s R&D efforts over the years.
More than half of the respondents said the government would be justified in blocking the sale because of claims from Research In Motion that Nortel prevented it from bidding. “Foreign buyers have consistently failed to live up to commitments made when purchasing Canadian assets,” wrote one respondent. “Canadian buyers should not be shut out.”
Only 37% of the CEOs believe the government shouldn’t interfere because of the harm that could cause to foreign investment and trade relations.
The respondents were also miffed that Export Development Canada previously offered financing to Nokia Siemens Networks when it made its initial bid for Nortel’s assets. Nearly 70% of the CEOs argue EDC acted improperly. “The idea of financing foreign firms to do their vulture picking at presumably bargain-basement terms is so bizarre that it does not bear talking about,” wrote one CEO. “Only in Canada, eh?”