TORONTO - Canadians want and expect the federal government to prevent the US$1.1-billion sale of Nortel Network's (TSX:NT) coveted wireless assets to Ericsson of Sweden, Research In Motion (TSX:RIM) said Wednesday.
RIM issued a statement after the deadline passed for appeals to challenge a bankruptcy court ruling allowing the Nortel sale to the Swedish telecommunications firm.
"Now that the bankruptcy court's appeal period has passed, Industry Minister (Tony) Clement must examine very carefully how the Investment Canada Act applies to the proposed Nortel-Ericsson transaction," said the statement.
"RIM believes that a $1.13-billion transaction must be reviewed to ensure that Canada's national interests are met."
RIM said Wednesday it wanted Clement to help negotiate a deal between RIM and Nortel "to find a solution in the interests of all parties."
Long-time Nortel watcher Duncan Stewart said the Harper government was looking for an excuse to avoid intervening in the Nortel deal by valuing the assets at a fraction of the sale price.
A published report said the sale of Nortel's wireless technology would be evaluated by the federal government based on the $149 million balance sheet value of its assets, far too low to trigger a review under the Investment Canada Act.
"I think they're picking the book value one as a way of avoiding saying something that is politically harder to say," said Stewart, director of research and analysis at DSAM Consulting.
"If you say 'sorry, our hands are tied,' you avoid making enemies."
Investment Canada has a C$312-million threshold for a full-scale review of a sale, but new rules approved by cabinet would change the evaluation to "enterprise value" which includes intellectual property and employees.
Jack Mintz, who holds the Palmer Chair in Public Policy at the University of Calgary, said the government can't start using the new rules to value the Nortel sale because the regulations haven't been put in place yet.
"Then they'd be looking like they're manipulating the process," said Mintz.
If the enterprise value were used, the Nortel sale to Ericsson would certainly surpass the threshold for a review, said Stewart.
"The government is positioning itself so it can say we are not reviewing this because it doesn't fall above a certain threshold," he said.
"And it's an easy way out. That way they don't have to make judgment calls."
Clement's office declined comment Wednesday on the Nortel valuation, and said the government was still waiting for the court process to be completed.
Ontario Finance Minister Dwight Duncan warned "it would be a mistake" to let Nortel's wireless technology go to a foreign company, and said it would endanger Canada's role as a world leader in telecommunications.
"When you have patents that a range of telecommunications companies around the world want to get their hands on, they have not just the book value that an accountant might ascribe, but they also have a value that goes well beyond that," said Duncan.
"Obviously the (federal Conservatives) are not prepared to do anything."
Mintz dismissed the argument that Canadian taxpayers paid for the technology developed by Nortel, noting that international giants like IBM also benefited from research and development tax credits.
"In the 1990s, IBM was second to Nortel in the use of the R-and-D tax credit, and so would we block a bulk purchase of R-and-D in Canada that IBM owned," wondered Mintz. "We'd end up being the laughing stock of the world."
The sale "has become more political than perhaps it need be" added Mintz, who said he doesn't expect the deal will be stopped because of national security concerns.
Representatives of Ericsson Canada were unavailable for comment Wednesday.