Quebec government pledges to protect SNC-Lavalin from hostile takeover

The new government of the Canadian province of Quebec has said it stands ready to protect Montreal-headquartered engineer and contractor SNC-Lavalin from hostile takeover after the company’s shares fell in October on the news that it would not be allowed to avoid a lengthy trial over bribery charges.

Premier François Legault, whose party, the Coalition Avenir Québec (CAQ), won the provincial election on 1 October, said steps should be taken to ensure the company, Canada’s largest construction firm, stays in the province, reports The Montreal Gazette.

Shares have fallen about 17% in 2018, with the steepest drop coming after the company revealed in October that Canadian prosecutors had ruled out a so-called a remediation deal over charges laid in 2015 in relation to its dealings in Libya.

Such a deal would have let the company, which has a market value of about CAN$8.3bn, defer prosecution in exchange for fines, improvements and cooperation.

To stop a takeover, investors in Quebec, including the government’s own investment arm, could cooperate to amass a "blocking" stake of at least 33% in SNC-Lavalin, the premier told media last week, suggesting also that the company might consider creating a dual-class share structure to prevent hostile acquisitions.

The company maintains it has transformed itself since a multifaceted corruption scandal erupted in late 2012. 

In a statement to the Gazette, SNC-Lavalin said it "and the province share the desire to maintain our head office in Quebec; however, the ongoing legal challenges continue to weigh on the company".

SNC-Lavalin’s Canadian workforce has shrunk to around 8,500, down from 20,000 in 2013, the Gazette said.

In all, a list of 10 "strategic" firms deemed deserving of action to keep in the province has been drawn up by the new government.

"The government of Quebec has to figure out what head offices are strategically important," Economy Minister Pierre Fitzgibbon told the Gazette. "There is a scale of 1 to 10. Can we intervene for all head offices? No. If we had to buy 20 per cent of all Quebec companies that are publicly traded, we would go bankrupt. So we have to be intelligent."

Image: One of SNC-Lavalin’s international projects has been the Ichthys LNG facility off Australia’s northwest coast (SNC-Lavalin)

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