Deal keeps Manac in Quebec hands
Privatization includes Caisse, Dutil family
MONTREAL • Canada’s largest truck trailer manufacturer is being privatized by a con- sortium of some of Quebec’s biggest investors in a move that will keep Manac Inc. from ending up in the hands of foreign buyers.
The Caisse de dépôt et placement du Québec, the Fonds de solidarité FTQ, Investissement Québec and the Quebec Manufacturing Fund announced Thursday they will purchase the company in partnership with an entity controlled by the Dutil family, a dynasty in the province’s manufacturing sector.
“Keeping that homegrown control was a factor that was important,” said CEO Charles Dutil, who will reinvest his shares in the transaction and remain at the helm of Manac. “In the business environment in Quebec, you can’t have a better team.”
“I understand the reality of our Quebec manufacturing base, the importance of that Quebec control and that certain nervousness that we have as a province in losing control over certain manufacturing operations,” Dutil said in an interview.
Manac was founded by Charles’s father, Marcel Dutil, and builds specialty trailers such as grain hoppers and logging trailers for sale across North America.
The transaction puts Manac’s enterprise value at about $186 million, including debt.
Other shareholders will receive $10.20 in cash per share, which represents an 18-per-cent premium to its price before Manac announced March 30 it was examining strategic options. Stakeholders will be asked to approve the deal, which has been unanimously endorsed by the board, at a special meeting Oct. 7.
“That’s good for the existing shareholders, but there is still some potential at that value for us to grow with the other partners,” said Caisse vicepresident Christian Dubé.
The move comes just 18 months after Manac completed an initial public offering that raised about $40 million in gross proceeds, about half of which was used to repay debt.
The Dutil family is making a $36-million equity investment for 38 per cent of the Saint-Georges, Que.-based company.
The Caisse de dépôt, the Fonds de solidarité and Investissement Québec are each investing $17 million in equity and $15 million in loans, while the Québec Manufacturing Fund is investing $8 million in equity.
The Caisse, FTQ and Investissement Québec will each hold 18 per cent, while the Québec Manufacturing Fund will take the remaining eight per cent.
“We showed interest in the transaction with the goal of bringing back the ownership into the Quebec family,” said Normand Chouinard, executive vice-president of investments at the Fonds de solidarité FTQ.
“Manac is considered a jewel in the manufacturing sector ... when we can keep manufacturing jobs in the province and participate in this sort of transaction, it’s in line with our mission.”
In March, Quebec’s economy minister, Jacques Daoust, threw his support behind the province’s investment arm assisting any partner interested in Manac in order to keep it based in the province, where it employees about 700 workers.
Though Investissement Québec said it made the decision independent of the ministry, it does have a mission to support local industry, particularly in the manufacturing sector.
“Potential strategic buyers would have probably been American and there was a risk of relocating the headquarters and a portion of the jobs,” said Charles Boutin, director of industrial and manufacturing sector development at Investissement Québec.
Manac began operations in 1966 and acquired Canam Steel in 1972, a company founded by Marcel Dutil’s father, Roger Dutil.
The company has plants in Ontario and Missouri, and acquired B.C.-based Peerless Ltd. last June for $14.75 million.
The company’s net income decreased 26 per cent to $9.7 million last year despite higher revenues of $330.7 million due to the addition of Peerless.
After going public, Manac’s largest owners were the FTQ, the Caisse de depot, Fiera Capital and the American Industrial Partners Capital Fund, who reached the end of its investment timeline and wanted to sell its shares.
“You’d prefer to buy low and sell high, but you never choose the timing,” said Boutin.
In the U.S., Manac is seventh-largest in its sector. Dutil said this is where it is looking to expand under private ownership.
“With the market share we have on this side of the border it’s clear that our growth over the next cycle will come more from the U.S. side. There’s no doubt there,” he said.