SNC-Lavalin Soars as Election Uncertainty Eases With Trudeau Win
SNC-Lavalin Soars as Election Uncertainty Eases With Trudeau Win
(Bloomberg) -- Shares of SNC-Lavalin Group Inc. surged amid optimism Justin Trudeau’s election win may pave the way forward for the embattled engineering firm.
Montreal-based SNC jumped as much as 12%, the most since Sept. 10, after Prime Minister Trudeau’s Liberal Party won a second term to lead Canada with a minority government. The company found itself in the middle of Canada’s biggest political crisis in years after the country’s ethics watchdog found Trudeau pushed for the company avoid a criminal trial over its dealings in Libya.
When asked whether a so-called deferred-prosecution agreement is more likely with the Trudeau Liberals back in power, Finance Minister Bill Morneau said on BNN Bloomberg TV Tuesday: “That’s a continuing discussion that the justice minister will have to have.”
Trudeau has always said his interest in SNC’s fate was based on his desire to avoid job losses.
Prior to this week, the stock had slumped more than 60% this year after the company issued three profit warnings, wrote down the value of its Middle East energy business and lost a contract in Chile valued at $260 million.
Not everyone is optimistic about SNC prospects. “We see no reason to be long SNC-Lavalin until better visibility is offered,” Frederic Bastien, analyst at Raymond James said in a report published before the election results came in. The status of its court proceedings, the challenged fixed-price projects it has yet to substantially complete, and the earnings trajectory of its low-risk engineering and nuclear services businesses are all reasons to stay cautious, he added.
--With assistance from Aoyon Ashraf.
To contact the reporter on this story: Divya Balji in Toronto at dbalji1@bloomberg.net
To contact the editors responsible for this story: Madeleine Lim at mlim131@bloomberg.net, ;David Scanlan at dscanlan@bloomberg.net, Jacqueline Thorpe
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