Govt. confirms decision to block sale of MDA space division

The Canadian government delivered official word Friday of its decision to block the $1.3-billion sale of Vancouver-based MacDonald, Dettwiler and Associates' space-technology division to a U.S. space and weapons company.

The Canadian government delivered official word Friday of its decision to block the $1.3-billion sale of Vancouver-based MacDonald, Dettwiler and Associates' space-technology division to a U.S. space and weapons company.

Federal Industry Minister Jim Prentice made the announcement early Friday in a release, following what he called an "extensive and rigorous review process" of the proposed sale to Minnesota-based Alliant Techsystems Inc., also known as ATK.

"I have confirmed my initial decision that I am not satisfied that ATK's proposed acquisition of the Information Systems Business of MDA would likely be of net benefit to Canada," he said.

Prentice last month announced his rejection of the proposed foreign takeover of MDA's space and information systems divisions, which includes Canadarm, Dextre and the Radarsat-2 satellite, to Alliant.

Critics of the sale, including former Canadian Space Agency head Marc Garneau, had called on Prentice to block the deal, saying it handed over taxpayer-funded technology and, in the case of Radarsat-2, gave away technology designed to protect Canada's sovereignty.

ATK had said that if the deal went through, it would honour all of MDA's existing contracts with the Canadian government, including "access protocols" to Radarsat-2 in the event of a national emergency. ATK had 30 days to persuade the government otherwise, but that review period ended Thursday, the same day the company issued its year-end earnings.

Speaking at the Canadian Space Agency headquarters in Montreal on Friday, Prentice said questions about the application of foreign law to the operation of MDA's Radarsat-2 satellite were central to the decision.

In an official statement, ATK said it was disappointed the acquisition did not close.

Prentice also announced on Friday the awarding of a new four-year, $109 million contract to MDA for ongoing engineering services for the robotic systems aboard the International Space Station.

The agreement is similar to a deal the government and MDA signed in 2003 for the same services. That contract was also for four years, and was worth $116 million.

Last week, MDA, the maker of the Radarsat-2 satellite and the Canadarm technology at work on the U.S. space shuttles and International Space Station, broke its long silence over the government's decision, arguing it wanted a chance to make its case for the sale.

Prentice said on Friday he had not done so because the rules of the Investment Canada Act prevented him from engaging in consultation with discussions beyond the party proposing the transaction: in this case, ATK.

MDA issued a statement on Friday, saying it will "continue with its baseline long-term business plan of growing its business and delivering shareholder return."

MDA is expected to release its own year-end earnings on May 12.

With files from the Canadian Press