Quebec will move to shield businesses from hostile takeovers and buy direct stakes in oil and mining projects to nurture homegrown companies, Finance Minister Nicolas Marceau said.
Marceau proposed amendments to the province’s Business Corporations Act that would give public companies “adequate means of defense” against unsolicited bids. The measures are aimed at preserving head-office jobs that help generate C$5 billion ($4.5 billion) in economic activity, according to Marceau’s budget released yesterday in Quebec City.
Quebec’s moves come as Montreal-based Osisko Mining Corp. (OSK) seeks alternatives to a C$2.96 billion hostile bid from Goldcorp Inc. (G) that it rejected as too low. U.S. retailer Lowe’s Cos. (LOW) dropped its plan for an unsolicited takeover of Quebec rival Rona Inc. (RON) in 2012 after the proposal sparked opposition from provincial politicians and investors such as the Caisse de Depot et Placement du Quebec.
“Being masters and prosperous in our own house also means protecting the head offices of Quebec businesses,” Marceau said, according to the text of a speech to the Quebec legislature. “The presence of head offices in Quebec is both a major source of wealth and a strategic factor in economic-development decisions.”
The takeover recommendations are contained in a report prepared by a task force led by CGI Group Inc. (GIB/A) Executive Vice President Claude Seguin. Quebec companies would have the right to amend their statutes accordingly if the law is passed, Marceau said.
Vulnerable Companies
“These are necessary measures that will allow Quebec to be comparable to some U.S. states,” Francoise Bertrand, chief executive officer of the Federation des Chambres de Commerce du Quebec, a business lobby group, said in an interview in Quebec City. “When a hostile bid is not in the best interest of a company’s survival, it’s very important for the board to have options at its disposal. There’s nothing in our toolkit now to prevent a company like Osisko from being taken over,” said Bertrand, who also serves as chairwoman of Montreal-based media and telecommunications company Quebecor Inc. (QBR/B)
Seguin’s report identified 25 Quebec-based companies that remain “more vulnerable” to a hostile bid. Of those, eight — such as Rona and grocer Metro Inc. (MRU) — are incorporated under Quebec legislation. Another 17 — including Osisko and engineering firm SNC-Lavalin Group Inc. (SNC) — are incorporated under Canadian legislation. The proposed changes would only apply to companies incorporated in the province, meaning Osisko would need to change its charter to benefit from the takeover protection. As of 2011, there were 578 head offices in Quebec.
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