A bid by the London Stock Exchange to take over TMX Group, operator of the Toronto Stock Exchange, reopens the debate on whether Canada is really open for global business, or if regulatory and political hurdles are set to wreck another high-profile deal.
The initial signs are that the proposed merger, which would create the world's fourth-largest trading center with a market value of about $6.9 billion, will not be approved quickly.
The minority Conservative government -- which dented its reputation among foreign investors last year by blocking BHP Billiton's $39 billion takeover bid for fertilizer producer Potash Corp -- has punted the issue for now.
In comments on Wednesday, Industry Minister Tony Clement would not even commit to reviewing the exchange deal, even though he must, under law, examine all foreign takeovers worth more than C$299 million ($302 million) to see if they are of net benefit to Canada.
Asked about possible negative implications of the deal, Clement told reporters: I am many moons away from being able to answer that question.
Once a review starts, Ottawa has 45 days to make up its mind, but can extend that period for another 30 days.
Clement's task could become more complicated if opposition politicians decide to use the merger as an issue in the next election, which could come as early as April.
The left-leaning New Democrats said the merger could damage Canadian sovereignty, while the main opposition Liberal Party gave little away, save to ask whether it made sense for a booming Toronto exchange to merge with a London bourse that has seen better days.
This is a long way from being a done deal and we have a lot of questions to answer and a lot of people have to weigh in on it, said Liberal industry spokesman Marc Garneau.
Both parties viscerally opposed the Potash deal, which broke down after vigorous opposition from the Western province of Saskatchewan, where Potash Corp is based.
Now there are questions on whether French-speaking Quebec could play a similar obstructionist role here.
The province took a cautious line on Wednesday. Finance Minister Raymond Bachand said the deal had major implications and announced the provincial securities regulator would also need to give its blessing.
Quebec, which has a strong separatist movement, is a big player in Canada and Ottawa tends to be loath to pick fights with it for fear of boosting support for the separatists.
The Quebec regulator is involved because TMX also owns a derivatives exchange headquartered in Montreal. The regulator said on Wednesday it would hold hearings into the proposed merger, which could also drag out the approval process.
Hanging over the whole process is the unpleasant and politically bruising fight over Potash, which ended with the government shocking markets and saying no to BHP.
Ottawa said the deal would not be of net benefit to Canada, but critics noted the proposed takeover was unpopular in the West, where the Conservatives enjoy most support.
The Conservatives, stung by charges they had let politics undermine their reputation for being business-friendly, promised to quickly outline what kind of foreign investments they would welcome and to clarify what net benefit means.
They have delayed acting on both promises, which means investors cannot be sure of what kind of foreign takeovers might be blocked.
(The government) came out right after Potash saying, 'that was a unique circumstance and we're still open for business,' so I think they'll have to be very careful in scrutinizing this one, said Huy Do, expert in competition law and foreign investment at Fasken Martineau, a leading corporate law firm.
($1=0.62 British pounds)
(Additional reporting by Solarina Ho, Julie Gordon and Euan Rocha in Toronto; editing by Peter Galloway)