SNC-Lavalin Vulnerable to Hostile Takeover, Quebec Premier Says
(Bloomberg) -- SNC-Lavalin Group Inc. is vulnerable to a takeover and Quebec should take steps to ensure that the engineering and construction company remains based in the province, Premier Francois Legault said.
SNC shares have dropped about 18 percent this year. Most of the decline occurred after Canadian prosecutors in October ruled out a negotiated settlement with the company over past corruption charges.
“We have indications’’ that foreign buyers may be looking at Montreal-based SNC, Legault told Montreal’s 98.5 FM radio station Thursday in an interview. Because of its inability to bid on certain federal contracts, SNC is “in a vulnerable situation. There is no controlling shareholder.’’
Corporate head-office flight is a sensitive issue in Quebec after foreign buyers acquired locally based companies such as home improvement retailer Rona Inc. in recent years.
Local investors such as the Caisse de Depot et Placement du Quebec and Investissement Quebec –- an arm of the provincial government –- could team up to amass a “blocking’’ stake of at least 33 percent in SNC, Legault said. SNC could also look to adopt a dual-class share structure to prevent unwanted takeovers, the premier said.
Legault said in the interview that he and Economy Minister Pierre Fitzgibbon recently met with Caisse Chief Executive Officer Michael Sabia to discuss SNC and other files, which he didn’t identify.
SNC is one of 10 Quebec-based companies that the government “must monitor,’’ Legault added.
Daniela Pizzuto, a spokeswoman for SNC, said in an e-mail Thursday that the company has nothing to say with respect to Legault’s comments. Maxime Chagnon, a spokesman for the Caisse in Montreal, declined to comment.
Caisse de Depot, SNC’s biggest shareholder, recently boosted its stake in the company. It now owns about 20 percent of the outstanding shares, having purchased about 4.1 million shares in recent months, Bloomberg data show.
“It’s important to keep our head offices’’ in Quebec, Legault said. “We can’t do what the previous governments did.’’
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