A bid by the London Stock Exchange to take over TMX Group, operator of the Toronto Stock Exchange, resurrects 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 sidestepped 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 later told the House of Commons that his officials were already meeting investors and would continue to do so over the course of the next several days.
Prime Minister Stephen Harper declined to comment on the deal. Last year he was criticized for public remarks about BHP Billiton's bid for Potash Corp.
Clement's task could become more complicated if opposition politicians decide to make the TMX-LSE merger an issue in the next election, which could come as early as April.
The left-leaning New Democrats said the deal could damage Canadian sovereignty, while the main opposition Liberals gave little away, save to ask whether a booming Toronto exchange should unite 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 BHP-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 the largely French-speaking province of 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, the Autorite des marches financiers (AMF), is involved because TMX Group also owns a derivatives exchange headquartered in Montreal.
The AMF said on Wednesday it would hold hearings into the proposed merger, which could also drag out the approvals timeline.
Hanging over the whole process is the memory of the politically bruising fight over Potash. Ottawa eventually ruled the deal would not be of net benefit to Canada but critics noted that BHP's proposed takeover was very unpopular in the West, where the Conservatives enjoy their strongest 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, Euan Rocha and Louise Egan; editing by Rob Wilson)