Takeover bids cut both ways in Quebec – by Peter Hadekel (Montreal Gazette – January 15, 2014)

http://www.montrealgazette.com/index.html

There’s long been a circle-the-wagons mentality in Quebec about corporate takeovers. When a buyer from outside the province is interested in a Quebec company, a protectionist reflex often kicks in and calls are made for government action.

We saw it again this week when Vancouver-based mining giant Goldcorp Inc. made a $2.6-billion hostile takeover bid for Montreal-based Osisko Mining Corp., operator of the big Canadian Malartic gold mine in Abitibi.

The Board of Trade of Metropolitan Montreal was quick to ring the alarm bells, calling on the Quebec government to ensure that if the transaction goes through “it won’t harm the economy of Quebec and the metropolitan region.”

But for every Quebec company that gets taken over by outside interests, there’s one making a deal abroad. That’s how the market works in a global economy.

Widely-held Osisko is one of the few Quebec-based mining firms with operations and production in the province, said Board of Trade president Michel Leblanc.It’s had a big economic impact on the Abitibi region and spends about $500 million a year on goods and services in Quebec.

As well, Leblanc noted, its Montreal head office buys a range of professional services that help to support the local white-collar economy

All true. But still it’s a stretch to imagine the provincial government would interfere in a free-market transaction in which the final say goes to shareholders. Imposing terms and conditions might alter the economics of the deal and make it unattractive for Goldcorp to pursue.

Of course, that might be the goal in the end, but efforts to protect Quebec’s corporate base send the wrong message.

Montreal, in particular, touts itself as an open, international economy, going to great lengths to attract outside investment. And some of the city’s fastest growing companies owe their success to a strategy of international acquisitions.

Think of information-technology specialist CGI Inc., which bulked up in 2012 with the $2.7-billion acquisition of Logica, a big U.K. firm. CGI’s entire growth strategy is to act as a consolidator, buying companies in North America and abroad in order to drive future growth.

Look at Alimentation Couche-Tard, which has become the rock star of Quebec Inc. and now ranks as the 31st largest retailer in the world, ahead of all other Canadian retailers, according to a recent survey.

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