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SNC target of mini-tender offer

Ryan Remiorz/The Canadian Press/Ryan Remiorz/The Canadian Press

SNC-Lavalin Group Inc. is the latest publicly listed company to be the target of a below-market, "mini-tender" offer from TRC Capital Corp.

Montreal-based global engineering giant SNC said Tuesday it had been notified that Toronto-based TRC has offered to buy up to two million, or about 1.32 per cent, of the company's common shares for $38 per share.

The mini-tender offer represents a 4.74-per-cent discount to SNC's closing price on March 28, the day before TRC made the offer, SNC said in a news release. The offer expires April 26.

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Mini-tender offers are designed to acquire less than 5 per cent of a company's outstanding shares in order to avoid certain disclosure requirements of the U.S. Securities and Exchange Commission.

Within the past few weeks alone, TRC has also made mini-tender offers for Best Buy Co., Inc. and chip maker Marvell Technology Group Ltd. In February, cellphone-chip supplier Qualcomm Inc. and Dutch consumer electronics giant Royal Philips Electronics NV rejected comparable offers from TRC.

Other companies TRC has targeted with mini-tender offers include Manulife Financial Corp., RioCan Real Estate Investment Trust and Research In Motion.

SNC warned shareholders that TRC has made "numerous similar unsolicited mini-tender offers for shares of other public companies" and that the offers are "designed to seek less than 5 per cent of a company's outstanding shares, thereby avoiding many [regulatory]disclosure and procedural requirements."

Critics and securities regulators have suggested that unsophisticated shareholders might tender their shares to a lowball TRC offer without understanding it is below market value.

But Lorne Albaum, a securities lawyer who heads TRC, said in an interview that it would be extremely rare for even small investors to not know the stock price of their holdings.

"Markets and stock prices are so front-and-centre these days," he said. "I'm sure people are current with their investments."

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These kinds of offers can prove attractive to investors who own an odd number of shares and want to avoid having to pay brokerage fees through a regular sale, he said.

Large shareholders who don't want to cause ripples on the stock exchange might also be interested, he added.

SNC shares represent good value these days, Mr. Albaum said: The price has fallen on news of a scandal over $56-million in improper payments, cash that has gone missing in Libya, and the recent departure of chief executive Pierre Duhaime.

SNC also recently disclosed that one of its subsidiaries has been temporarily suspended by the World Bank from bidding on bank-financed projects. The move is related to an ongoing investigation into allegations that SNC staff bribed government officials in Bangladesh to win a $10-million contract for work on a bridge project.

"SNC at this price is a good long-term investment for us," Mr. Albaum said. Despite its current problems, the underlying business of the company remains solid, he said.



With files from Associated Press

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More

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