A bid by Holcim Ltd. to turn St. Lawrence Cement Group Inc. into a private entity “materially undervalues the company,” says Jarislowsky Fraser Ltd, the cement firm’s biggest minority shareholder.
The Montreal investment company, run by outspoken investor advocate Stephen Jarislowsky, put out a statement yesterday saying Holcim’s $40.25-a-share proposal is too low “given the quality of the [St. Lawrence] assets.”
The company closed yesterday up 30 cents, at $41.
Holcim, based in Switzerland, already owns about 63 per cent of the Montreal-based cement company’s equity, and controls about 79 per cent of the votes, initially offered $36.50 a share to minority shareholders in late February.
In mid-May Holcim boosted its offer to $40.25 after a special committee of the St. Lawrence board set a valuation range of $35.50 to $41 on the company. The board backed the new offer.
But Mr. Jarislowsky says that’s still not good enough. “We think the price is low in comparison with other cement companies that have recently been taken over,” he said in an interview yesterday. An appropriate price would be from 10 to 20 per cent higher, he said.
Mr. Jarislowsky also complained that there has not been enough information about how the value was determined, and he wants to meet with the St. Lawrence special committee to discuss that issue.
The company has been receptive to the idea of arranging a meeting, but no date has been set, he said.
The Holcim offer, open until July, 4, requires a majority of the minority shareholders to vote in favour.
Mr. Jarislowsky’s firm owns about one-third of the minority position. Mutual funds own most of the balance.
One analyst, who did not want to be identified, said Holcim’s offer is a “pretty good price,” given the weakness in the cement market. At St. Lawrence, sales were down 15 per cent in the first quarter, compared with the year-earlier quarter.
Jarislowsky Fraser, however, said cement assets are scarce in North America at the moment because of high barriers to entry into the business. St. Lawrence assets “have a high replacement value and attractive business prospects.”