By Tom Bradley

There was a story in the Report on Business on Monday about the results so far from China’s oil investments in Canada. To date, Chinese energy acquisitions (including CNOOC’s purchase of Nexen and Petrochina’s pending acquisition of 40% of Athabasca Oil’s oil sands project) have been characterized by hurdles, delays and low/no returns. The article refers to signs of “buyer’s remorse”.

It is too early to judge how well these deals will turn out for the purchasers, but the Chinese influx over the last few years reminds me of the tsunami of foreign purchases we experienced in 2005-2008. Canada lost virtually all of its steel companies, most of its major mining complexes and a number of other large companies through that period.

As it turned out, most of those deals were massive disappointments. Purchase prices were inflated by a hyped-up takeover cycle, which in turn led to massive write-offs (some within a couple of years). Rio Tinto spent $38 billion to buy Alcan in 2007 and wrote off $25 billion of the purchase price by early 2013. AMD took a series of write-downs totaling more than half of the purchase price for ATI Technologies, less than two years after buying it in 2006 (talk about buyer’s remorse!). That’s just two disasters. There were many other beauties as well.

This time around is different of course. The M&A froth is not as apparent (in the oil patch at least) and the buyers are looking for more than just resources in the ground. They’re also looking for expertize, which is better for jobs and investment in Canada.

Nonetheless, as concerned Canadians, we naturally get worked up when foreigners are buying our assets and gutting our head offices (as I noted in a 2007 blog), but quite often it’s the buyers who are all worked up a year or two later.