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Federal Approval for Chinese Takeover Deal of Technology Firm

According to reporting by the Globe and Mail, the purchase of ITF Technologies, a Montreal-based fibre-laser company, by Hong Kong-based O-Net was approved on March 17. A China Electronics Corp. subsidiary holds over 25% of O-Net’s shares, which is significant due to China Electronics’ Chinese state-ownership, and which was a factor in the previous Canadian Government’s blocking of the deal in 2015.

Changes in military technology, which is incorporating directed-energy weapons, are forecast to push the fibre-laser industry, sized at US$24.5 billion (C$32.9 billion) in 2016, to become a US$24.5 billion dollar industry by 2021. ITF Technologies has also worked in the field of quantum cryptography, and a decade ago worked on a project in this field while partnered with the Canadian government’s Communications Security Establishment agency, National Research Council, and Department of National Defence.

In January of this year it came to light that, in 2015, Canadian national security agencies had warned the Canadian government against allowing the deal to go through. It was on this national security basis that the Government of Canada, then under the Conservatives, halted the deal, only for the new Liberal Government to start a new review of the deal in November 2016.

Speaking on this business case, Canadian Ambassador to China and former Minister of Immigration, Refugees, and Citizenship John McCallum stated “The general point is that we are open… but we do take national security very seriously. We know that is an important dimension.”

“We pursued the investigation under the interest of Canada… but issues around national security remain very important for us.”

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