Corporate Canada finding that US can resist outside tentacles, too
If the business of America is business, outsiders shouldn't intrude. That's what large Canadian companies with a lot of cash to spend are finding out as the current Canadian corporate invasion of US business runs afoul of major legal and nationalistic, anti-Canadian public relations campaigns.
A recent big loser has been Canadian Pacific Enterprises, or CPE, the investment arm of the even biger Canadian Pacific transportation and industrial empire, which tried and failed to take over the Hobart Corporation of Troy, Ohio , for $400 million (US).
With interests in mines, steel products, pulp and paper, and real estate, some of it already in the United States, CPE defined its planned takeover of Hobart, a giant it its own right, operating in 11 states with 10,000 workers, as "a good fit."
David Meeker, Hobart's chairman, called it a "stinking deal." He referred to an end-of- the-week long-distance call from CPE's president, John Stenason (who has a Harvard PhD in economics), in which he proposed a takeover, as a "Friday-night special." The implication of this was that Hobart was to be "gunned down" by the pushy canadians.
Earlier this year another large Canadian loser was the Montreal-based Seagram Company Ltd. , which already has extensive American operations. Seagram failed in its $2 billion offer to buy out St. Joe Minerals Corporation, based in New York State.
American legislators, who used to criticize the Canadians for opposing the huge US ownershp of key Canadian industries (70 percent of Canadian oil companies are still foreignowned), now sing a different tune.
They want these raiding Canadian corporations stopped cold from making takeover bids that some US companies have found hard to refuse.
Most outspoken in this regard is Texan Jim Wright, Democratic majority leader in the House of Rpresentatives, who wants Canadian corporate raids on US firms made a part of future US-Canada diplomatic discussions.
Mr. Wright comes from the state that back in 1973 was the scene of the first large-scale Canadian industrial corporate move into US business. This was the $ 271 million controlling interest in Texasgulf Inc., bought by the Canadian Development Corporation.
The CDC is a national development agency formed by the Canadian government in 1971 to buy out industries that could help form a wide, Canadian-owned base of diversified companies. It is now 48 percent owned by Canada's federal government.
At the time, Texans had howled even louder about the "illegal, improper, . . . and fraudulent" foreign takeover of a true-blue Texas company than earlier Canadian blasts about the "Texanization" of Canada's western oil industry. Canada's oil capital, Calgary, Alberta, was sometimes dubbed merely a "northern suburb of Houston."
But the Texas court battle of the day to prevent Texasgulf Inc. being "Canadianized" was won by the invading Canadians.
The newest Canadian incursion just concluded is somewhat different from all of the above.
It is the successful move by Calgary's expanding Dome Petroleum Ltd. to secure a 53 percent controlling interest in Hudson's Bay Oil & Gas Company, also of Calgary, by buying 20 percent of Conoco Inc. of Stamford, Conn., its parent, with a mixed cash and stock purchase.
The whole deal will cost Dome about $1.5 billion (US).
Conoco Inc. , the ninth-largest American oil company, also lost a court battle against the Canadians when a US federal court district judge denied its injunction against Dome's determined incursion.
Meantime, other corporate giants from Canada, chiefly the multibillion-dollar chartered banks, have been moving quietly and with no fanfare into Coral Gables, a luxury suburb of Miami.
They are joining, the growing number of other foreign banks, investment houses, and manufacturing corporations that have set up US headquarters there for the expansion of already profitable offshore business interests in the nearby C aribbean and Latin America.