Prime Minister Stephen Harper is promising to issue new guidelines on foreign takeovers amid growing unease over the government's surprise rejection of a Malaysian state-owned oil company's bid for a Canadian resource firm.
The prime minister said Monday that new guidelines will be issued "soon" and that most applications would be accepted.
The statement comes as markets roiled over the Friday night rejection of the $6-billion takeover offer of natural gas producer Progress Energy Resources by Malaysia's Petronas, and what the decision might portend for the $15.1-billion proposal by a Chinese state-owned company to acquire Nexen Energy.
Progress shares fell hard at market opening and were still down nine per cent at close Monday. Nexen shares also fell, almost five per cent, on speculation Ottawa may also play hard ball against China National Offshore Oil Co.
Reports say Ottawa waited until the last minute, just before the midnight deadline, to announce the decision because it wanted a second 30-day extension on its review, but Petronas refused permission.
"We do not have a time scheduled, but soon the government will create a new framework for these investments," Harper told reporters in French.
"Within that framework that will come out soon, we will be able to welcome the overwhelming majority of investments."
He was less clear in English, saying that Ottawa "will give greater clarity on our policy framework when we take a couple of decisions that are before us at the present time."
Progress and Petronas said Monday they're meeting with Industry Canada officials to "better understand" what the government's requirements are with respect to the deal.
Industry Minister Christian Paradis said the government was "not satisfied" that the acquisition would bring a "net benefit" to Canada, but said Petronas has 27 days to come back with a better offer.
The minister would offer no other explanation, but trade lawyer Lawrence Herman said he believes Petronas failed to convince Ottawa it would operate under market principles and not as arm of the Malaysian government. "This is a very significant decision. It draws a line in the sand and says to any state-owned investor, 'If you want to come into Canada, we expected [you] to operate in accordance to free market principles in terms of corporate governance, decision-making and commercial operations,'" he said.
The proposed Nexen purchase by CNOOC may be different, because among other aspects, CNOOC is traded on the New York Stock Exchange.
Ottawa has pledged to clarify how it applies the "net benefit" test in the Investment Canada Act before, particularly after its controversial decision to block a foreign takeover of Potash Corp. in 2010.
