Depending on the structure and size of the transaction, certain foreign acquisitions of Canadian businesses may be subject to pre-closing review under the Investment Canada Act ("ICA") to determine whether they will be of "net benefit" to Canada. (Where review is not required, a foreign acquiror of a Canadian business must still file a notification within 30 days of completing the acquisition.) Acquisitions involving particular industries such as transportation, financial services and cultural matters are more likely to be reviewed and are subject to special considerations under the ICA. In most reviewable transactions, the acquiror will need to provide undertakings to the Canadian government regarding matters such as investment and employment in order to ensure that their transactions satisfy the "net benefit" test and can proceed. Since undertakings are generally confidential, it is important to have experienced counsel familiar with the undertaking process so that the ICA review can be completed in a timely fashion and not delay the transaction from closing.
Our Competition and Foreign Investment Review Group is a leader in advising foreign-based and Canadian clients on the application of the ICA. We have extensive experience in all aspects of foreign investment review, both before the Investment Review Division ("IRD") of Industry Canada and, for transactions involving cultural matters, the Department of Canadian Heritage. We have represented clients in some of the largest and most complex foreign investment reviews undertaken in Canada. In addition to securing approvals under the ICA, our lawyers have also assisted clients in less visible ways, notably in establishing to the satisfaction of the IRD that the ICA did not apply to a transaction and in making representations with respect to foreign acquisitions. In recent years, our lawyers have also advised clients on the applicability and viability of proposed amendments to the scope of the ICA. For instance, in 2005, amendments to the ICA were proposed to allow the government to review foreign investments where they might compromise Canada's "national security".
Our Work
Below are some examples of significant ICA reviews in which Davies was recently involved:
• Acted for Xstrata Plc in its takeover battle for Falconbridge Limited. The transaction, which valued Falconbridge at $24.1 billion, was the largest successful all cash offer in Canadian history and was subject to one of the most extensive reviews ever undertaken by the IRD;
• Represented Dubai Ports World in its acquisition of The Peninsular and Oriental Steam Navigation Company for US$6.8 billion, making DP World a top three global port operator, with 51 terminals in 30 countries, across 5 continents;
• Acted for GE Commercial Finance, the business-to-business financial services unit of the General Electric Company, in its US$2.3 billion acquisition of Bombardier Capital's Inventory Finance division;
• Represented Masonite International Corporation, one of the world's largest makers of steel and wooden doors, which was acquired for $3.1 billion by Stile Acquisition Corp., an affiliate of Kohlberg Kravis Roberts & Co.;
• Acted for GE Capital Corp. in its acquisition, through its affiliate Heller Financial Canada, of Canadian assets of the CitiCapital Transportation Financial Services Group;
• Represented an affiliate of Bain Capital in its purchase of Verizon Communications Inc.'s directory operations in Canada, SuperPages Canada, Canada's second-largest directories publisher at the time;
• Acted for NBC Universal, Inc., a subsidiary of the General Electric Company, in its acquisition of Vivendi Universal, S.A.; and
• Acted for Circuit City Stores, Inc. in its US$286 million purchase of InterTAN, Inc., which operated through approximately 990 company retail stores and dealer outlets in Canada under the trade names RadioShack®, Rogers Plus® and Battery Plus®.
