Canam stock nearly doubles following offer to go private
Steel firm’s leaders feel constraints of being public no longer fit with its vision
Canam Group is preparing to end its 33-year run as a public company after partnering with a U.S. firm and Quebec investors to take the structural steel specialist private.
After a few years of reflection, the leadership of the company founded in 1960 concluded that the constraints of being public no longer fit with its vision.
Chief executive Marc Dutil said its shares are punished for weak contracts but rarely credited when most of its business runs smoothly.
“In recent years, the cyclical and risky nature of the company’s business is less and less what the markets are looking for,” he said in an interview Thursday.
Canam’s shares fell last summer after it took a $32-million provision due to cost overruns from a U.S. project that resulted in the reorganization of its heavy metal structural activities. It also recently announced a review of its American bridges sector.
Under the proposal, American Industrial Partners will control 60 per cent of the company and its board of directors. The Dutil family and Quebec’s Caisse de depot pension fund and Solidarity investment fund will increase their stake from 27.9 per cent now to 40 per cent.
The core shareholders are offering to buy up all the publicly traded shares for nearly double their recent price.
Shares in Canam, which specializes in supplying structural steel for construction of buildings and bridges, jumped 96.61 per cent to close at $12.19, just short of the offer of $12.30 per share.
Shareholders other than members of the Dutil Family will be offered cash for their stock, subject to shareholder approvals.
The Dutil Family will receive stock in the private company and vote in favour of the deal.
In addition, the Caisse and the union investment fund are expected to roll over some or all of their stock.
The company — which has 23 plants across North America — says its head office will stay in Quebec.
Dutil expects AIP will remain involved for five to seven years and is an “ideal partner” because it has in the past invested in semi-trailer manufacturer Manac, which is also owned by the Dutil family.
However, he ruled out a return to the stock market on the advice of company founder and chairman Marcel Dutil.
“My father always told me that his biggest mistake would have been to go public. We’ll remember that. “
A special shareholder meeting is slated for June 30 to approve the transaction.
Analyst Sara O’Brien of RBC Dominion Securities says the buyout offer values Canam at about $875 million, including assumed debt.