The planned sale of the space division of MacDonald, Dettwiler and Associates (MDA) to Alliant Techsystems (ATK) has hit a roadblock that is unprecedented but not necessarily surprising. The deal required the approval of the Canadian government since MDA is a Canadian company and ATK is an American one, but this week Industry Minister Jim Prentice issued a letter blocking the sale, telling ATK that “based on the information received at this time” the deal is not “likely to be of net benefit to Canada.” It’s the first time since the current Canadian law that governs sales of companies to foreign entities was enacted in 1989 that such a deal was blocked.
However, there had been strong opposition to the sale among some groups in Canada, with particular concern regarding the control of MDA’s RADARSAT-2 radar imaging satellite. That satellite was funded by the Canadian government, but would be owned by ATK if the deal went through; this led to concerns that ATK or the US government could block access to radar imagery to Canada. ATK now has 30 days to provide additional information to Industry Canada to make their case for the deal, and/or try to restructure the deal to address Canadian concerns.
It’s interesting to see how uninterested all the usual suspects are in this piece of news. Nobody want to bash the Canadian government for a change?
Okay, then allow me. This is a typical protectionist response that for short term political advantage will most likely have the opposite effect of ensuring that MDA don’t get the capital they need. Ergo, long term lost jobs.
Protectionism aside, I disagree. There is little if any evidence that the “consolidation” of the last decade-plus has benefited the space industry. In fact, just the opposite. I think we’re better off with a large number of diverse companies competing for work with different approaches.
When there is only one contractor (think United Launch Alliance) there is only one price and that price does not need to be competative with anything.
MDA seems to have managed to come up with the capital they need to develop their specialized components in the past. I don’t see why they won’t in the future.
— Donald
“This is a typical protectionist response that for short term political advantage will most likely have the opposite effect of ensuring that MDA don’t get the capital they need. Ergo, long term lost jobs.”
Read Mr. Foust’s post again. Canada’s response is only partially driven by job protectionism (if at all). Blocking sale of MDA is mostly about control of Radarsat remote sensing assets.
“Nobody want to bash the Canadian government for a change?”
A better question might be why did ATK want to pursue this purchase in the first place? Although related, robotics and satellites hardly play to ATK’s core business strengths in munitions. There would be a real risk of overdiversification and resulting mismanagement of MDA’s assets, with little to gain in terms of consolidation or synergy for ATK.
FWIW…
[…] space community in recent months, in light of the Canadian government’s decision to block the sale of the space unit of MDA to ATK, a US company. While that deal is now dead, the debate about the sale set off a debate about […]
[…] acquisition of MacDonald, Dettwiler and Associates’ (MDA) space unit by American company ATK, a deal that was eventually blocked by the Canadian government. Shortly after that a Canadian think tank, the Rideau Institute, issued a white paper on Canadian […]