Higher bid wins over St. Lawrence holdouts

Higher bid wins over St. Lawrence holdouts
Published: 26 July 2007

A group of minority shareholders that tried to block an “undervalued” buyout of St. Lawrence Cement Group Inc. by its parent company has decided to throw in the towel. 
The institutional investors, led by Jarislowsky Fraser Ltd. of Montreal, will now tender their shares to the recently enriched $43.50 a share offer from Holcim Ltd.
Jarislowsky Fraser was unhappy with Holcim’s initial proposal, made in February, to buy out minority shareholders of the Montreal-based cement maker for $36.50. And it wasn’t any happier when the offer was increased to $40.25 in May. 
Jarislowsky Fraser chairman Stephen Jarislowsky recruited several other institutional investors, who represented more than 57 per cent of the minority holding, and they wrote to Holcim saying the offer was inadequate given the quality of the St. Lawrence assets. 
The investors set their line in the sand at $46, and said they would accept nothing less than that amount. 
They’ve changed their minds, however, and have decided the $43.50 revised offer made on July 13 is enough to persuade them to tender. 
“We would have liked to try and do a little bit better than that,” said Jarislowsky Fraser president Len Racioppo, “but the bulk of the group would like to move ahead at this price level.” 
After “extensive talks” with Holcim, the shareholder group revised its position and was prepared to accept $44, he said, and “we weren’t going to fight for [the last] 50 cents.” 
The dissident group included Canadian money managers Gluskin Sheff + Associates Inc. and JC Clark Ltd., along with mutual fund company CI Investments Inc., and U.S. firms Sandell Asset Management Corp., Carlson Capital LP and Brookline Avenue Partners. 
Brad Dunkley, a portfolio manager at Gluskin Sheff, said he intends to tender his company’s shares even though he would have preferred that St. Lawrence remain a public company. The fact that Holcim raised the price sharply after the group complained shows that “you’ve got to fight to get a fair price when you’re in a minority position,” he said.
Mr. Racioppo said Jarislowsky Fraser has held St. Lawrence stock for more than 25 years, and it has generated very good returns. 
The shares were trading in the $30 range when Holcim made its first buyback offer in February.
Mr. Racioppo is still enthusiastic about St. Lawrence, which he says is poised to take advantage of the current worldwide focus on building and fixing infrastructure – activities that will use a lot of cement.