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Guy Laliberte (C), CEO of Cirque du Soleil, poses with performers as he attends the premiere of Michael Jackson THE IMMORTAL World Tour show by Cirque du Soleil in Montreal, October 2, 2011. Laliberté has agreed to sell control of Cirque du Soleil, the world's largest theatrical production company, for about $1.5 billion, the Globe and Mail reported, citing sources familiar with the matter.

Christinne Muschi/Reuters

The business of acquiring Quebec companies could become more onerous if the $1.5-billion takeover of Cirque du Soleil is approved by regulators.

According to people familiar with the fine print of the planned acquisition, private equity giants TPG Capital and Fosun Capital Group have committed to some of the toughest job protections yet seen in Canada. If the deal is approved by regulators over the next few months, it's a good bet future suitors will be hearing similar proposals at the Quebec deal table.

The unlikely author of the tough new job security is the province's pension fund manager Caisse de dépôt et placement du Québec. The Caisse has a unique status in the investment world because of its dual mandate to foster the economic interests of Quebec, while protecting the interests of the province's pension members. Its double mission has seen the Caisse invest, sometimes disastrously, in companies such as grocery chain Steinberg Inc. to keep local business ownership in the province.

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As a minority investor in the Cirque deal alongside TPG and Fosun, the Caisse played an unusual role negotiating special rights for the company's Quebec workers. Appreciative remarks from political leaders after the deal was announced leave little doubt about Caisse's agenda.

The Caisse, Premier Philippe Couillard told a business conference Monday, "defended the interest of Quebec in the transaction very well."

A spokesman for TPG declined to comment. Caisse spokesman Maxime Chagnon said it would be wrong for investors to assume that the Cirque deal will complicate future foreign takeovers. "Every deal is different," he said. "We asked questions," he said of the Caisse's role in negotiations. "This is a good investment for the Caisse. And this is a good investment for our depositors. And that's what we do."

Under terms of the Cirque agreement, Texas-based TPG and Shanghai-based Fosun have agreed in their deal proposal to standard language on job protections. Like foreign buyers before them, they said they have no intention to reduce the Cirque's Canadian labour force of 1,400. They also followed tradition by agreeing, in the event of a significant economic downturn, to limit potential layoffs to 20 per cent or 280 of the Montreal-based company's employees.

What makes the proposed Cirque deal so interesting is the duration of the buyers' commitment. Most foreign acquirers of Canadian businesses understand they are unlikely to win provincial or federal support for takeovers or mergers unless they agree to honor job protections for about five years.

TPG and Fosun, however, have committed to job protections for as long as either of them remain controlling shareholders of the circus production company. For two major investors, which have already articulated multi-year plans to expand the Cirque's business into China and new media platforms, the jobs promise will likely have a very long run.

The Cirque's founder and controlling shareholder Guy Laliberté understood as soon as he hired Goldman Sachs Group Inc. to help sell his company that the deal faced huge political headwinds. He was adamant that he would not agree to a deal unless Cirque's headquarters remained in Montreal and its Canadian staff stayed put.

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Anything less, he understood, would have been unpalatable in a province where the Cirque is a home-grown cultural and business champion.

"When a company is created in Quebec, what's important is to ensure that the personality, its values, its cultural specificity is preserved," Mr. Laliberté told reporters Monday. His insistence won standard protections for the Cirque's headquarters future impact.

It was the Caisse, according to sources, who bargained so effectively in difficult negotiations last week for the long term local employee protections.

In the end TPG, slated to be the Cirque's majority shareholder with a 60-per-cent stake, likely made the calculation that the cost of protecting 1,100 jobs was, in a $1.5-billion transaction, equivalent to a rounding error.

The stakes for future acquirers with bigger takeover ambitions in Quebec could potentially be more costly. The province now has a deal precedent it can wave in front of foreign buyers to push for what every local government wants, but seldom gets, when faced with a foreign takeover: a local jobs guarantee.

If the province wants to push for the protections, it appears to have a willing ally in the Caisse. In comments to reporters last week ahead of the Cirque takeover announcement, Quebec's economics minister Jacques Daoust expressed gratitude for the pension manager's bargaining finesse.

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"What reassures me is that the Caisse is defending our interests," he said. "We want to secure the decision-making power here at home and our tool to intervene is the Caisse de dépôt."

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