Canada Approves Chinese Acquisition of Satellite Telecommunications Company Servicing U.S. Military

At the beginning of June 2017, the Canadian government approved the sale of Norsat International, a satellite communications company that includes the U.S. military as a significant client, to China-based Hytera Communications.  The approval was quickly criticized by Parliamentarians from both the Conservative and New Democratic Party in Canada as well as by security professionals and observers in the U.S. for the lack of a full national security review by the Canadian government.

The preliminary approval was surprising to many, as Norsat technology is used by the U.S. Department of Defense, the U.S. Marine Corps, the U.S. Army, aircraft manufacturer Boeing, NATO, Ireland’s Department of Defense, the Taiwanese army and major media companies such as CBS News and Reuters (according to the Globe and Mail).

Hytera offered to acquire the company late last year.  Critics of the deal accuse the government of pursuing closer trade ties with the Chinese at the expense of national security-related considerations (as well as those of its allies, such as the United States).  The deal is presently on hold following a U.S. hedge fund, Privet Fund Management, offering a competing bid of $67.3 million on June 13.  Moreover, analysts expect Hytera to counter-bid, potentially with the assistance of state-backed financing.

Hytera faced similar security-related concerns in May 2017 after regulators in the United Kingdom expressed national security concerns over the company’s potential acquisition of Sepura, a communications company that manufacturers radios and walkie talkies for the domestic police services.