Minister says book value of vendor's 6,000 patents below review threshold.
The Canadian government ruled Tuesday its rules governing foreign investment don't apply in the US$4.5 billion sale of patents belonging to Nortel Networks Corp.
In a statement, Industry Minister Christian Paradis said the acquisition of 6,000 patents - by a consortium primarily of giant foreign technology companies led by Apple Inc. and Sweden's Telefon AB L.M. Ericsson - didn't trigger a government review because the book value of the assets was less than the C$312 million (US$325 million) threshold established under Canadian law.
"Based on the information provided by the investor and Nortel's 2010 audited financial statements, the acquisition of the Nortel patents is not subject to review," Paradis said.
Had there been a review, Canadian law compels government officials to determine the deal provides a so-called net benefit to the country's economy. No acquisition or investment can be implemented without the industry minister's approval.
Paradis instructed government officials on July 6 to determine whether a review was required. His statement provided no details, but people familiar with the transaction had previously told Dow Jones Newswires the Investment Canada Act didn't apply because the patent assets were valued at zero on Nortel's books. The Act also calls for a review of assets that generate annual revenue of more than C$73 million, but Nortel's global patent portfolio never made more than C$10 million annually, the people said.
The winning consortium - which paid five times the amount of an original offer from Google Inc.- also included Canada's own Research in Motion Ltd., which contributed US$770 million of the final US$4.5 billion winning bid. Other members of the successful bid team were Sony Corp. and EMC Corp.
Nortel filed for bankruptcy in 2009, and has been selling off assets in bankruptcy court since.(Total Telecom)
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