Dutils look to protect Quebec jobs with deal for Canam assets

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Quebec’s prominent Dutil family is leading a group to buy back control of Canam Group’s Canadian assets in a move designed to protect the structural steel maker’s local factories from possible closings and job losses in a recession.

The Dutil family’s holding company, Placements CMI Inc., is partnering with pension fund Caisse de dépôt et placement du Québec and labour fund Fonds de Solidarité FTQ to buy Canam’s Canadian operations from U.S. private equity firm American Industrial Partners (AIP) for about $840-million, including debt, according to a statement Monday. Each partner will take an equal share.

The Dutils are a family of politically connected business titans who hail from the Beauce region of Quebec, an isolated area between Quebec City and the Maine border that has historically produced more than its natural share of entrepreneurs (Rémi Marcoux, who built Montreal-based Transcontinental Inc. into a printing and media force, and Placide Poulin, who built bathrooms-accessories maker Maax Inc., both hail from the area).

The Dutils founded two main businesses: Canam, a fabricator of steel and construction products, and Manac, a major builder of highway semi-trailers. Manac is a separate company.

Canam’s projects include Toronto’s BMO Field, New York’s Yankee Stadium and the Governor Mario M. Cuomo Bridge spanning the Hudson River in New York State.

The family sought the deal in part to protect Canam’s Quebec operations, especially in the Beauce, company chairman Marcel Dutil said in an interview. Having a U.S.-based controlling shareholder could leave those operations exposed when difficult decisions need to be made in an economic downturn, he said.

“The only thing this changes is that it reassures [our people] that the morning we find ourselves in recession, it’s not the factories in the Beauce that will close first,” Mr. Dutil said. “This protects the 1,000 people we have in the Beauce. Because we are in a cyclical business. And we’re overdue for a recession.”

The deal comes 2½ years after Saint-George, Que.-based Canam went private in a transaction valued at $875-million that saw control of the company shift to AIP, which took a roughly 60-per-cent share with the rest largely split between the Dutil family, the Caisse and Fonds de Solidarité. The family had concluded that the cyclical and risky nature of the construction industry was increasingly at odds with the imperatives of public markets.

The family’s thinking in that respect has not changed and the new Canadian company born from this transaction will not seek a public listing, Mr. Dutil said. Going public “was a mistake in 1984. And we won’t repeat that mistake,” he said.

When it went private in 2017, Canam was coming off a difficult stretch after reporting a surprise loss for its fourth quarter and announcing it would abandon structural steelwork on complex, large-scale projects. Chief executive Marc Dutil, Marcel Dutil’s son, said at the time that there is “a disconnect between the pace at which we see our business going and what the markets were expecting.”

Since then, the business has been performing well, Marcel Dutil said. He said the company did $2.1-billion in sales in fiscal 2019 and achieved good profitability, marking one of its best years in its 50-plus-year history. Canam currently employs more than 4,900 people, including just more than 2,000 in Canada.

The estimated $840-million deal value includes the company’s roughly $340-million debt, meaning the equity portion is about $500-million, Mr. Dutil said. The new company will keep the Canam name, said Canam spokesperson Marie-Noelle Goulet.

“This transaction will repatriate control of the company to Quebec and allow it to continue expanding, guided by its strong entrepreneurial culture,” said Charles Émond, who leads the Caisse’s private equity strategies and investment strategy in Quebec.

Facilities that will fall under control of the three Quebec Canam partners include Canam Buildings plants in St. Gédéon-de-Beauce, Boucherville, Mississauga and Calgary as well as Canam Bridges plants located in Quebec City, Laval and Shawinigan. The company’s engineering and drafting offices in Romania and India, its Stonebridge erection operations in South Plainfield, N.J., as well as Canam Bridges U.S. assets in Claremont, N.H., will also be part of the new company.

Operations of Canam’s current U.S. subsidiaries Canam Steel Corp. and Fabsouth are not part of the deal and remain jointly owned by AIP and the Quebec investor group under terms of their go-private deal in 2017, Canam said. New York-based AIP did not return a request for comment.