OTTAWA (Reuters) - Canada confirmed on Friday it would
block the proposed $1.33 billion sale of sensitive Canadian
satellite technology to U.S. rocket-maker Alliant Techsystems
Inc
Canada initially halted the deal a month ago -- in part because it feared it might lose control over top-secret images -- but gave Alliant Tech a month to appeal.
Industry Minister Jim Prentice said in a statement he still
felt the proposed sale by MacDonald Dettwiler and Associates
Ltd
Prentice said that while foreign investment plays an important role in the Canadian economy, "where a significant transaction does not demonstrate net benefit to Canada, it cannot be approved under the Investment Canada Act."
It was the first time Ottawa had prevented the sale of a domestic company to a foreign buyer.
Critics feared Canada would undermine its ability to protect itself by handing the high-tech Radarsat 2 satellite to a foreign firm.
They charged that the sale could result in Washington ordering Alliant Tech not to let Ottawa see data from the satellite, such as images revealing whether U.S. ships were sailing through Arctic waters.
Washington rejects Ottawa's claim to sovereignty over Arctic sea passages, which it says are international waters.
MDA had also planned to sell to Alliant Tech a unit that makes robotics for the International Space Station. On Friday, Canada handed MDA a C$109 million ($108 million) contract for servicing Canadian technology on t(e space station.
Alliant Tech, which makes a range of small artillery, rocket engines and advanced missiles, said it was disappointed by Canada's decision, and would look for acquisitions elsewhere.
Accounting for costs of the aborted deal, Alliant Tech said it would apply a pre-tax charge of $6.6 million, worth 11 cents per share after tax, to its fiscal fourth-quarter results, which were announced earlier this week.
The company is "exploring legal options" on recovering costs from Canada's government for the blocked deal, an Alliant Tech spokesman said.
The company, based in Minneapolis, kept its fiscal 2009 earnings forecast unchanged at $7.15 to $7.35 per share, on revenue of about $4.5 billion.
($1=$1.01 Canadian)
(Additional reporting by Bill Rigby in new York)
(Reporting by Louise Egan; Editing by David Holmes and Dave Zimmerman)
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