RESEARCH TRIANGLE PARK, N.C. – Nortel’s sale of its key wireless assets may have cleared judicial hurdles Tuesday in U.S. and Canadian bankruptcy courts, but the jury of public opinion is still out on the deal.
A sampling of articles in the Canadian press reveals how sharply divided many people remain about Nortel. Should the Canadian government intervene and block the Ericsson-Nortel deal?
John Ivison, writing in the National Post, says the intervention decision is a “test for Tory policy.”
Will the conservative government take the action that it has avoided so far despite intervening in bailouts of GM and Chrysler?
The government’s response the National Post said in a headline.
“If the [Prime Minister Stephen] Harper government bows to pressure from opposition parties and Dalton Mc-Guinty’s Liberals to block the sale of Nortel’s wireless assets to Sweden’s Telefon Ericsson, would the last conservative to leave Canada please turn out the lights.
“To be fair to the government, there are no serious indications that Tony Clement, the Industry Minister, is set to nix the deal. He has said that he is reviewing the takeover proposal, but under Canadian law he is obliged to do so.
“Still, the government’s response will determine if the Prime Minister’s fine words on resisting protectionism were just so much hot air.”
However, The Star in Toronto takes a much different view.
In an editorial headlined the paper wants intervention.
“The question is: where will all this political noise lead us, now that the bankruptcy courts have formally approved the sale of Nortel’s wireless assets to Ericsson, a Swedish firm?
“Notwithstanding the courts’ rulings, the federal government has the legal weapons at its disposal to block the sale under the Investment Canada Act. The laissez-faire Conservatives are, of course, reluctant to use these weapons. But negative publicity forced their hand last year when they blocked the sale of MacDonald Dettwiler, a robotics firm, to American interests. As with Nortel, the argument in that case was that these high-tech assets had been developed with substantial assistance from the Canadian taxpayers.
“The government should not hesitate to intervene again to keep Nortel’s assets in Canadian hands.”
At the Montreal Gazette, Peter Hadekel wasn’t wise.
“Blocking legitimate deal could give Canada a huge black eye,” the headline reads.
“The real question is whether the government is going to cater to nationalist sentiment and ignore the orderly, market-driven disposition of assets in a process in which RIM has not taken part.
“As a Nortel lawyer pointed out yesterday, a public auction was held for the wireless assets last Friday, lasting 13 hours and six rounds, and attracting three bidders. Ericsson emerged the winner.
“No Canadian buyer stepped forward. It seems that months of talks between RIM and Nortel had broken off before the auction was held.”
Mixing free enterprise and politics isn’t ever much fun to watch. Who can eat sausage after watching it being made? The Nortel saga is far from over. More assets remain to be sold.
The bidding and debate will continue.