Canam Group founders and Quebec investor group buying back Canadian operations

A group of Quebec investors including the founding Dutil family is buying back the Canadian operations of the Canam Group architectural steel company, as well as certain assets in the United States and overseas, less than three years after selling them to a U.S. private equity firm.

The transaction, which is expected to close in the coming weeks, will total more than $840 million and account for nearly 2,700 of the company’s 4,900 employees.

“At 77, I’m not here for the next 20 years and the company’s shareholding is to my liking,” said Canam chairman Marcel Dutil in a telephone interview, adding that the decision was supported “unanimously” by his four children.

Canam has been led since 2012 by Marcel Dutil’s son, Marc.

Under the terms of the agreement, announced Monday, the new company will be owned equally by the group, which includes the Marcel Dutil family through its holding company, Placements CMI, as well as the Caisse de depot et placement du Quebec and the Quebec Solidarity Fund.

The deal includes the Canam Buildings plants in St. Gedeon-de-Beauce, Que., Boucherville, Que., Mississauga, Ont., and Calgary, and the Canam Bridges plants located in Quebec City, Laval, Que., and Shawinigan, Que.

Engineering and drafting offices in Brasov, Romania, and Kolkata, India, Stonebridge’s erection operations in South Plainfield, N.J., as well as Canam Bridges U.S.’s assets in Claremont, N.H., will also be part of the new company.

According to Marcel Dutil, these activities represent about half of the total sales of $2.1 billion generated last year by the company established in Saint-Georges, in Beauce.

The family took the company private through a deal in 2017 with the American Industrial Partners equity firm as it grappled with problem contracts and felt its vision was no longer consistent with stock markets.

At the time, industry analyst Mona Nazir of Laurentian Bank Securities said going private gave Canam “greater flexibility to run the business on a longer-term horizon without being held accountable to the Street’s quarterly report card.”

American Industrial Partners took control of 60 per cent of the company founded in 1960, while the Dutil family, the Caisse and the Solidarity Fund shared the remaining 40 per cent. The deal was valued at about $875 million, including debt.

Canam had indicated that the investment fund would be involved for five to seven years, but Dutil didn’t want to wait that long and began to negotiate about six months ago.

In 2015, he also partnered to take semi-trailer manufacturer Manac private.

The New York private equity firm remains part-owner of the American subsidiaries Canam Steel Corp. and FabSouth, which have six factories.

“The price asked by the majority shareholder was too high for our taste,” said Dutil when asked why AIP was keeping part of the assets. “If we don’t buy them back in the longer term, we’re going to go to the United States anyway. “

In its most recent annual report, the Caisse said that as of Dec. 31, 2018, the value of its investment in Canam ranged between $50 million and $100 million. The Solidarity Fund valued its investment at $49 million as of Nov. 30.

Given the cyclical nature of Canam’s business, Dutil said it was out of the question to consider a return to the Toronto Stock Exchange.

“In Beauce, we have 1,000 employees,” he said. “If there is a recession, factories in the region would have been the first to be affected. Socially, we have an obligation. I started working with the grandfathers of the people who are there.”

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