Skepticism greets Icahn’s presence

Talisman shares retreat 2% after initial surge

CALGARY • Talisman Energy Inc. shares retreated Tuesday, one day after Carl Icahn disclosed a 6% stake in the Calgary-based oil and gas producer, suggesting some skepticism the arrival of the U.S. activist investor would accelerate a corporate turnaround that appears to have stalled.

Mr. Icahn, who previously led boardroom shakeups at Chesapeake Energy Corp. and Transocean Ltd., said late Monday he had acquired a 5.97% stake in Talisman for roughly $277-million, reviving talk of a corporate split-up or sale of the struggling Canadian oil company.

Talisman shares jumped on the news in after-hours trading, but fell back Tuesday in Toronto, closing at $12.89, down 26¢ or almost 2%.

Talisman has “been at it for a year, so the idea that an activist investor, no matter how aggressive, is going to surface value faster, I think it’s a bit of stretch,” said John Stephenson, portfolio manager at First Asset Investment Management Inc. in Toronto.

“It’s so contradictory of the government’s policy and dealings with this particular individual that I’m left shellshocked,” he added.

Mr. Sawiris is the former head of Orascom Telecom Holding S.A.E., the foreign conglomerate that had invested almost half a billion dollars in Globalive Wireless Management Corp. buying spectrum licences in the 2008 auction for the cellular airwaves and poured further money into the launch of the Wind Mobile brand.

The country’s telecom regulator raised concerns about the ownership structure that gave the non-Canadian backers majority equity ownership but non-voting control and blocked the startup carrier from operating.

But in 2009, then-Industry Minister Tony Clement overruled the Canadian Radiotelevision and Telecommunications Commission’s decision and gave Wind the clearance it needed to launch. By June of 2012, the government had amended the foreign investment rules to permit non-Canadians to acquire 100% of small telecom firms with up to 10% of the market share.

To many, it seemed the government’s previous decisions hinted at an acceptance of Mr. Sawiris and his associates. yet, some say the decision to overrule the CRTC came after Ottawa had already sold the spectrum licences to Globalive’s foreign backers and was faced with the collapse of its policy to promote wireless competition if it did not step in and allow them to operate.

Mr. Sawiris has also been a controversial figure at times and poked at the government in 2011 when he told the CBC that he regretted getting involved in Canadian business, likening Canada to communist China.

“I don’t know why Canada wants to be matched with China,” he said. “There’s only two countries [with] very ridiculous old laws, and nothing is happening… There’s no real political will here to introduce competition into this closed market.”

In 2008, his company Orascom launched into contentious territory — the North Korean market. Mr. Sawiris invested in Koryolink, the country’s first 3G mobile network, in a joint venture with the North Korean government with a 75:25 split. In May this year, the company said it had reached the two-million subscriber mark.

And in 2005, Khaled Bichara, one of Mr. Sawiris’s partners at Accelero, pleaded guilty in the United States to making false statements to secure a $2.1-million loan from the United States Agency for International Development. Mr. Bichara ultimately paid only a small fine, but detractors still raise the legal trouble he faced.

Or maybe Mr. Sawiris isn’t as toxic to the Canadian government as he may now seem.

The second half of a brief statement from Industry Minister James Moore may provide some insight into whether the government simply viewed the business itself as too strategic to be sold.

“MTS Allstream operates a national fibre optic network that provides critical telecommunications services to businesses and governments, including the Government of Canada,” it said.

Allstream has often worked with the federal government and last December it announced it won a multi-year deal to supply IP services to Shared Services Canada.

“I think if any business has significant dealings with the government and the buyer is non-Canadian, then it behooves the investor to take national security issues into consideration, without a doubt,” said Oliver Borgers, a partner who deals with foreign investment reviews at McCarthy Tetrault LLP in Toronto.

The firm Mr. Sawiris cofounded and backs, said in a statement Tuesday it was open with the government throughout the almost five-month review process since the deal was announced in May.

“Accelero has successfully met national security requirements in every international market where it does business. The approach was no different in Canada,” it said.