TORONTO -- Canada's industry minister said Wednesday the government won't block the $1.1 billion sale of Nortel Networks' wireless division to Sweden's Ericsson.
Canada could have blocked the sale on national security grounds or in an Investment Canada review, which can be undertaken if the book value of the asset exceeds $292 million.
Industry Minister Tony Clement said there is no basis for a federal review on national security grounds and the book value of the assets is $170 million. In addition, Ericsson is planning to offer jobs to 800 Nortel workers in Canada.
"While this transaction is clearly not subject to review it is also evident that this deal is very beneficial to Canada," Clement said. "I should note that Ericsson has operations in Canada for over 56 years. It has invested over $2 billion dollars in research and development in Canada over the past 10 years and it employs over 1,900 Canadians."
He also said protectionism is the not the answer when the economy is trying to recover from a recession. "If we change the rules for Nortel, then we subject ourselves to changed rules involving Canadian companies who are investing overseas," Clement said.
Ericsson won an auction to buy the wireless division, which researches and develops products for advanced wireless telecom devices. It hopes to close the deal next month.
