Quebec takes aim at foreign takeovers with new watchdog group – by Nicolas Van Praet (Globe and Mail – February 22, 2017)

MONTREAL — In the wake of several high-profile takeovers of Quebec companies, such as Rona Inc. and Cirque du Soleil, the provincial government is implementing new measures aimed at promoting the growth of local businesses while maintaining corporate head offices in the province.

Premier Philippe Couillard’s government said Tuesday it would set up a watchdog group to monitor the risks of Quebec-based companies being subject to a sale or hostile takeover offer as well as advise the government on the capital needs of local companies as they grow. It also said Investment Quebec, the government’s investment arm, would step up efforts to educate business owners about the merits of dual-class share structures as a way to fend off unwanted suitors.

“Our objective really is to make sure that we have in place measures that are realistic and that favour the growth of local companies,” provincial Finance Minister Carlos Leitao said in an interview. “It’s not a defensive measure. It’s not to say ‘Thou shall not buy Quebec companies.’ That’s not the point. The point is that local companies have access to financing if they want to grow. And often that’s an obstacle.”

The moves come amid a debate about how far the province should go in taking action to prevent a further hollowing-out of corporate head offices. The purchase of beloved home-grown chicken chain St-Hubert by Ontario-based Cara Operations Ltd. last year was only the latest in a string of deals that fuelled public anxiety about locally built businesses getting taken out by non-Quebec interests.

While some have evoked nightmare scenarios of significant job losses as an ecosystem of Quebec-based lawyers, accounts and suppliers gets thinned out with every takeover deal, the provincial Liberals have cautioned there’s no need to be alarmist. They argue that hostile bids of Quebec companies are rare and successful ones even rarer, with only one such deal since 2001. And they argue that Quebec companies are more often the ones buying than being bought.

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