Shares of MacDonald, Dettwiler and Associates fell sharply on the Toronto Stock Exchange on Thursday after the Canadian government signaled that it would block the company’s sale of its space division to an American defense contractor.
Shares of the Richmond, BC-based company, which had been trading at a high of $47 Canadian on Wednesday, fell to $42.85 Canadian on Thursday after Industry Minister Jim Prentice indicated that the”investment is not likely to be of net benefit to Canada.” The stock recovered slight to finish the week at $43.03 Canadian.
MDA had planned to sell its space division to U.S.-based Alliant Techsystems (ATK) for $1.325 billion in order to focus on its information systems business. Stockholders overwhelmingly approved the sale last month.
However, opponents said the sale would devastate the Canadian space industry, give Americans access to taxpayer-subsidized technology, and compromise the nation’s sovereignty. MDA built the Canadarms and the Dextre robot for the space shuttle and International Space Station, both funded by the Canadian government.
The company also build Radarsat 2, an advanced remote sensing satellite, which is now in orbit. Opponents said that U.S. law could block Canadian access to data from the satellite, which was 85 percent funded by the Canadian taxpayers.
Prentice reiterated his rejection of the sale during a speech on Friday at Canadian Space Agency headquarters in Longueuil, Quebec.
“We will not accept a loss of jurisdictional control to another party or another country,” he said.
ATK has until May 8 to argue for a reversal. MDA has said little about the decision except to release a terse statement on Thursday acknowledging receipt of Prentice’s letter and indicating that talks are continuing.
“MacDonald, Dettwiler and Associates Ltd., announced today that the Investment Canada process is a confidential process between ATK and the Government of Canada. As far as MDA is aware, the letter located at the link below, has been received and discussions between the parties continue. When we learn of any material development, we will make a public release,” the statement reads.