Quebec’s Paquin family is relinquishing control of marine cargo handling and environmental services company Logistec Corp. after a seven-decade run.
The Montreal-based company, whose shipping operations stretch from the Arctic to the Gulf of Mexico, said Monday it struck an agreement to be acquired by New York private equity firm Blue Wolf Capital Partners LLC and alternative investment firm Stonepeak. The buyers are offering $67 cash per share for Logistec LGT-B-T in a deal that values the company at $1.2-billion including debt.
“Since my father started this business more than 70 years ago, we have grown into industry leaders,” Logistec chief executive Madeleine Paquin said in a statement. “We see significant opportunity to collaborate with Blue Wolf to drive value creation for our people, our customers, and our communities while rewarding our existing shareholders.”
The deal is at least the third proposed takeover by U.S.-based buyers for a Quebec company this month, reflecting a currency dynamic that has increased the buying power of American businesses for Canadian assets. It follows on the heels of Boston health care company Haemonetics Corp.’s offer for Quebec City heart technology maker OpSens Inc. and Ember Infrastructure Management’s offer for water technology company H20 Innovation Inc.
Roger Paquin founded Quebec Terminals Ltd., now Logistec, in 1952. Madeleine Paquin now controls the company with her two sisters through their holding company Sumanic Investments Inc., which has 77 per cent of Logistec’s voting rights. Sumanic has struck a voting support agreement with the buyers.
Ms. Paquin told an interviewer in 2000 that she hoped the siblings would be able to attract two or three members of the next generation to get actively involved in the business if they feel the calling. This past May, however, they signalled they were ready to move on, and the company began a strategic review process to weigh a sale.
Blue Wolf’s offer was chosen by Logistec over a local bid submitted by pension fund giant Caisse de dépôt et placement du Québec, which partnered with an unnamed strategic company on an offer. Caisse spokesperson Kate Monfette said the pension fund manager, which currently holds just above 10 per cent of Logistec’s shares, will carefully review the coming transaction circular to “assess potential implications for the company, employees and other stakeholders in Quebec.”
When a Quebec company of this standing is in play, it can become a sensitive issue that draws government attention because the province does not want to lose any head offices and jobs – particularly if it’s a hostile takeover situation. In this case however, the company’s founding family triggered the sales process and are backing Blue Wolf’s bid, which comes with certain commitments.
The buyers said they intend to keep Logistec as a Quebec-based business working with current management teams as they plot plans for $200-million in capital expenditures and growth initiatives. The Quebec government wants to make sure those pledges are honoured and Guy LeBlanc, the CEO of Investissement Québec, its investment arm, said it is in talks with Blue Wolf to become a shareholder in Logistec to support the buyer commitments.
The offer by Blue Wolf Capital and Stonepeak is a premium of 61.2 per cent to the 20-day volume-weighted average trading price for Logistec’s Class A shares on May 19 and a 62.2 per cent premium to its Class B share price over the same time frame. Logistec will go private if and when the transaction is completed.
Montreal-based Van Berkom Global Asset Management, which holds shares in Logistec, has called the company “a rare pearl” whose 60 port and 90 terminal facilities are irreplaceable. It has pegged the fair market value of the cargo handler at between $75 and $100 per share and was disappointed by the Blue Wolf offer.
“It’s too low but it’s not low enough where we’re going to go and fight for it,” company founder and chairman Sebastien van Berkom told The Globe and Mail Monday.
Logistec has increased its profits in each of the last five years, tallying net income of $54-million in its last fiscal year on sales of $898-million. In addition to providing bulk and cargo handling at ports and terminals across North America, the company also has a successful environmental business that rebuilds aging water infrastructure and works on contaminated soils, among other specialties. In all, it employs 3,400 people.