The latest in M&A news: Bloomberg announced yesterday that the Abu Dhabi Investment Council completed its acquisition of a controlling stake (75%) of the New York Chrysler Building. The stake was previously held by a Prudential Financial investment fund.

As an iconic part of the New York City skyline, the Chrysler Building has been depicted countlessly in almost every medium—film, photography, video games, art, advertising, music, literature, and even fashion, as its use quickly establishes without doubt the location in which the depicted events are occurring. (Wikipedia)

The purchase marks yet another major North American investment by a Middle Eastern fund. Gulf countries, flush with revenues from unprecedented oil prices, are taking that extra cash and pouring it back into the countries who paid for the oil in the first place.

In Canada, foreign ownership is a sensitive political issue. Critics decry the so called ‘hollowing-out’ of corporate Canada, and warn of its effect on national security and sovereignty interests. Meanwhile, other countries with friendlier ownership regulations are realizing the positive effects of free markets. Businesses, consumers, and shareholders enjoy increases in wealth, competitive services, and exchange/transfer of global expertise.

The Canadian discussion on foreign ownership rules heated up last month with the release of the 65 recommendations arrived at by the Competition Policy Review Panel after a one-year study commissioned by the federal government (click here for report). The panel concluded that “the federal government needs to scrap its ban on bank mergers, lighten up its foreign ownership restrictions of uranium and airline assets, and liberalize the telecommunications industry“, reported the Globe and Mail.

Shortly after the release of the panel’s recommendations on foreign ownership, the Canadian Center for Policy Alternatives (CCPA) countered the study with a report arguing that Canada needs less foreign ownership, not more. Readers of this blog who are from Atlantic Canada may remember that the CCPA is the organization that vehemently argued against Atlantica and the proposal led by AIMS (Atlantic Institute for Market Studies). Click here for a previous blog post that discussed the confrontation in more detail.

The recommendations regarding the telcom sector specially hit close to home with many Canadians. The existing oligopoly of wireless providers in Canada has seen increasing criticism in the past few months. In the spotlight are exuberant data charges highlighted by the advent of the iPhone which will hit Canadian shelves for the first time tomorrow exclusively through Rogers Wireless.

Bell Aliant (BCE) and Telus Mobility are also under fire for announcing the introduction of new charges for each text message received by cell phone users unless they subscribe to a monthly plan. Many consumers feel that the competitive landscape in the telcom sector is unfriendly to the needs of the consumer.

While protectionists scorn the findings of the Competition Policy Review Panel, they fail to address a real hollowing-out currently taking place in Canada: existing foreign owners abandoning their Canadian assets and relocating elsewhere.

A rising Canadian dollar coupled with expensive union demands is leaving Ontario with an Auto Workers crisis as American auto plants shut down operations and moved out of Canada to friendlier markets. Atlantic provinces have been experiencing a drain of skilled workers for some time now as various plant shut-downs force skilled workers to relocate to western Canada in search of jobs.

So where will the next billion dollars of oil money be invested? Most likely not in Canada.