OTTAWA—Canada, bowing to heavy domestic pressure, said Thursday it had blocked the $1.325 billion sale of sensitive satellite and robotics technology to U.S. rocket-maker Alliant Techsystems Inc on the grounds that it would not be in the national interest.
Industry Minister Jim Prentice said in a statement that Alliant Tech had 30 days to contest the decision. It was the first time Canada has ever blocked the sale of a domestic firm to a foreign buyer.
A wide range of critics said the proposed sale by MacDonald Dettwiler and Associates Ltd would threaten Canadian sovereignty by putting control of the high-tech Radarsat 2 satellite into foreign hands.
Prentice sent a letter to Alliant Tech on April 8 saying he was "not satisfied that the proposed sale ... is likely to be of net benefit to Canada".
A spokeswoman for Prentice declined to comment further. She said the minister would speak to reporters about the decision at 3.15 p.m. (1915 GMT) Thursday.
Alliant Tech rejects the idea that Ottawa would lose control over Radarsat 2 if the sale were to go through.
The proposed deal quickly became a tricky problem for the minority right-leaning Conservative government, which opponents say is too close to the administration of U.S. President George W. Bush.
Opponents say the sale could result in Washington preventing Ottawa from seeing data from the satellite, such as images revealing whether U.S. ships were sailing through Arctic waters. Washington rejects Canada's claim to the Arctic passages, which it says are international waters.
Even some Conservative legislators—usually under the strict control of Prime Minister Stephen Harper—broke ranks to criticize the idea of selling satellite technology and land-based data processing centers to a U.S firm.
The left-leaning New Democratic Party, which said this week it was seeking legal ways to block the sale, claimed credit for the decision.
"(Our) campaign to bring sanity and sovereignty to Canadian policy seems to finally pay off ... the government needs to do a better job to protect Canadians' interests," party leader Jack Layton told Reuters.
Neither Alliant Tech or MDA were immediately available for comment.
Shares in the Canadian firm were down C$4.63—almost 11 percent—at C$42.22 by 9:40 a.m. on the Toronto Stock Exchange. Alliant Tech was almost unchanged at $107.70 in New York trading.
MDA Chief Executive Daniel Friedman told a parliamentary committee last week that Ottawa had "all the necessary powers and authority to ensure that in future it will continue to exercise full control over Radarsat 2".
MDA also plans to sell to Alliant a unit that makes robotics for the International Space Station—one that has received more than C$400 million ($392 million) in Canadian government investment.
Prentice's decision would appear to put something of a question mark over the future of MDA. Friedman said Canadian federal spending on space was not enough to support a company of MDA's size.
($1=$1.02 Canadian)
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