Government axes proposed $520 million Accelero-MTS Allstream deal over national security concerns

Manitoba Telecom Services (MTS) announced back in May that they finally struck a deal to offload Allstream – its enterprise business – for $520 million. The suitor was Accelero Capital Holdings, a Cairo-based investment company that’s spearheaded by Naguib Sawiris, former financial backer of Wind Mobile.

Both companies were expecting the deal to close ‘in the second half of 2013′ and was subject to the usual regulatory approvals from Industry Canada’ Well, the government has had its say and today they’ve rejected the sale of Allstream to Accelero due to national security concerns.

‘The result of this review is that the transaction will not proceed.’

In a statement, James Moore, Minister of Industry, said “The Government of Canada has concluded its review of Accelero Capital Holdings’ proposed acquisition of the Allstream division of Manitoba Telecom Services Inc. (MTS) under the national security provisions of the Investment Canada Act. The result of this review is that the transaction will not proceed. MTS Allstream operates a national fibre optic network that provides critical telecommunications services to businesses and governments, including the Government of Canada.”

MTS responded by saying they’re ‘extremely surprised and disappointed by this decision’ and that ‘the government has nevertheless now made the determination to reject the transaction due to unspecified national security concerns, and has rejected an offer from MTS and Accelero to take whatever actions are necessary to address the government’s concerns.’

Certainly looks like the government is not open to any sort of foreign investment in the telecommunications sector.

Source: Newswire
Via: Industry Canada