February 21, 2017

Quebec takes aim at foreign takeovers with new watchdog group

Nicolas van Praet | The Globe and Mail

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.

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Sixteen of the 69 largest Quebec corporations have no protection against a hostile takeover bid, Montreal’s Institute for Governance of Private and Public Organizations said in a 2016 report. They include grocer Metro Inc., T-shirt maker Gildan Activewear Inc. and retailer Dollarama Inc. A proposal by some observers that the government should push financial institutions to create a fund to purchase blocking stock positions before any hostile bid has materialized is not particularly appealing, the institute said. Read more