SNC-Lavalin has been sounded out for a possible takeover by at least two large foreign engineering firms, according to the Toronto-based Financial Post newspaper.
The two suitors for Canada’s largest, and most controversial, contractor are reported to be the Spanish giant Grupo ACS, whose subsidiaries currently partner with SNC-Lavalin on a number of projects, and Australia’s WorleyParsons.
A source told the Post: "People are circling. It’s a big prize, it’s worth having. The conversations have been informal, rather than direct overtures."
So far, SNC is understood to have discouraged negotiations. "Acquirers have shown up at the door to say ‘how do we engage in a conversation because we want to buy’, and they are getting snowballed a little bit," one source told the Post.
Any takeover of the Montreal-based company, which employs 40,000 people, would have to take into account the damage that the SNC-Lavalin brand has sustained over the past five years owing to its involvement in a series of foreign and domestic corruption scandals.
The company has launched an advertising campaign to rehabilitate its image. Using the slogan "Proud to build what matters", the firm has bought prime-time commercials on 16 television networks and print ads in major newspapers across Canada.
Suitors would also have to reckon with a continuing investigation by the Royal Canadian Mounted Police into accusations of criminal corruption. If this results in a prosecution, the company could face a 10-year ban on bidding for federal projects.
The charges are linked to SNC-Lavalin’s activities in Libya over a 10-year period ended in September 2011. The company insists that any wrongdoing was undertaken by executives who were on acting independently, and who have since been dismissed and prosecuted.
The damage done by these cases has also made SNC-Lavalin a relative bargain for companies such as WorleyParsons, an oil services firm that has made no secret of its plans to expand its present Canadian operations. According to the Post, industry analysts in Canada regard the firm’s share price as 70% below its fair value.
In February SNC-Lavalin launched its own lawsuit against a number of individuals, claiming a total of $38m in damages.
Among those being sued are Arthur Porter, a former healthcare executive and security official who is presently being detained in Panama. He allegedly took US$18m in bribes in relation to a $1bn superhospital contract in Montreal.
Also named in court documents are Riadh Ben Aissa, SNC-Lavalin’s former head of construction, Stéphane Roy, a former SNC-Lavalin vice-president and Yanai Elbaz, another healthcare manager. Porter’s wife, Pamela Mattock Porter, who pleaded guilty to two counts of money laundering in December, is also named.
Image: SNC-Lavalin’s Montreal headquarters (Wikimedia Commons)