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Here's a nice article to put things into perspective!!
Alcan buyout called "economic suicide" for Canada
Lynn Moore, CanWest News Service
Published: Saturday, July 14, 2007
MONTREAL -- The proposed acquisition of Alcan Inc. by the London- and Melbourne, Australia-based Rio Tinto Group is a symptom of "economic suicide" underway in this country, Montreal billionaire and shareholder activist Stephen Jarislowsky said Friday.
Others use less dramatic language as they engage in the hollowing-out-of-corporate-Canada debate but admit to growing concern over deals such as Rio Tinto's friendly $38.1-billion US bid for Alcan.
The Montreal-based aluminum producer is the 10th company on the TSX 60 to be taken over, or poised to be taken over, by a foreign company in the past three years, Jarislowsky noted.
Foreign takeovers are fuelling the Canadian dollar, which is "going through the roof" and contributing to the woes of Canada's exporting and manufacturing companies, he said.
"I think the Canadian government is wrong to let any of the 60 biggest companies get taken over by foreigners," said the founder and chairman of Jarislowsky Fraser Ltd., which manages $60 billion in assets.
The Conservative government's appointment of a panel to asses Canada's competition policy and foreign investment is akin to closing the barn door after the best horses have run away, Jarislowsky said.
"Only the stupid horses are left," along with banks and companies that, for regulatory reasons, can't leave, he said.
Ken Wong, an associate professor at Queen's University's business school, said there are few takers for unprofitable, poorly-run businesses, so it's not surprising the best companies are being bought.
But while businesses are looking out for their own interests, someone should be considering the national good, particularly when resources or resource-dependent companies are concerned, he said.
"I would be looking for certain signs that tell me that the merger or acquisition will be good for the country, not just the company" or shareholders, Wong said.
Ottawa should ensure the long-term stewardship of resources is factored into the equation so that lost resources can be tabulated in much the same way lost jobs have been, he said.
The Rio Tinto offer, unveiled Thursday, would see Rio Tinto Alcan with a head office in Montreal but its chief executive officer would report to Rio Tinto's CEO. Rio Tinto currently has its key aluminum and aluminum-related assets and offices in Australia.
Rio Tinto Alcan would be "the new hub" of Rio's aluminum business, although investment in Australia "would not be diminished," Rio Tinto CEO Tom Albanese said at Thursday's press conference in Montreal. There would be some ebb and flow of employees between Montreal and Brisbane, Australia, but the employment levels in Montreal would remain as high, if not higher, he added.
Descriptions like that make Concordia University finance professor Lawrence Kryzanowski uneasy because they remind him of what was said as Montreal head offices moved west when the separatist movement was gaining strength in Quebec.
"It is clear when a company moves a head office; less clear is when a company moves key functions out," he said. "Smart companies will do that over time."
The Royal Bank of Canada, for example, contends that it maintains a head office in Montreal but its corporate headquarters is in Toronto.
"You can say you still have the head office here in Montreal but (what matters) is where the head office work is carried out. I would expect of lot of that to happen" with Rio Tinto Alcan, Kryzanowski said.
Alcan "probably arranged the best deal for shareholders ... and Montreal," given the circumstances, Kryzanowski, an Alcan shareholder, said.
The Rio Tinto Alcan office in Montreal "will be a divisional office at best," Jarislowsky said.
One thing that helped tie Alcan to Canada were agreements between it and the governments of B.C. and Quebec that were linked to long-term, low-cost energy supplies for the aluminum producer, Kryzanowski said.
"If it wasn't for the agreements they had in both Quebec and B.C., I think the head office would probably move," he said.
The Quebec deal, signed last December just before Alcan announced a $1.8-billion US investment in the Saguaenay, requires that Alcan maintain in Quebec "substantive operational, financial and strategic activities and headquarters ... at levels which are substantially similar to those of Alcan" at the signing of the agreement.
Now it's up to Quebec and other interested parties to "be vigilant" and ensure that the deal is honoured, Kryzanowski said.
Quebec will have to decide how best to measure Rio Tinto Alcan's presence in Quebec, based on what it most values, be it payroll numbers, new products
development or research-and-development money spent, Wong said.
Montreal Gazette
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