This is a transcript of Quebec Finance Minister Raymond Bachand’s conference call, Tuesday, July 31.
[French] You saw this morning the announcement from Rona’s board of directors and faced with this event – something I rarely do, in fact this is the first time as Finance Minister that we in the government have intervened to give our opinion:
[English] the transaction is not in the interests of neither Quebec nor Canada.
[French] Rona is a very structural company in Quebec’s economy. We’re speaking of 15,000 employees, we’re speaking of another 33,000 employees when you include suppliers. So it’s almost 50,000 employees.
[English] And close to 90,000 jobs in Canada, directly in the stores, indirectly through suppliers.
[French] It’s ... very significant for the entire Canadian manufacturing industry. It’s the wholesaler/buyer aspect. Rona buys more than 85 per cent of its purchases in Canada, close to 47 per cent in Quebec.
[English] Rona purchases close to 85 per cent of its purchases from Canada, close to 45 per cent in Quebec.
... So this is why we are against this transaction. And we wish to say that we have mandated [provincial investment arm] Investissement Quebec to study every means it can use to block this transaction.
Q: [French] What options do you have right now?
A: Investissement Quebec can certainly take a stake and create or even lead a small coalition of people want to participate and do so in an organized fashion with Investissement Quebec.
I also call upon all shareholders who own shares in Rona, which is widely held. In this kind of transaction, you have to closely examine Quebec’s economic interest, of the country generally. It’s a hugely important company. I believe it’s one of the most important customers of the Desjardins Group, not only the parent company but all the buyers and all the suppliers.
And we simply can’t think that, despite the good-faith statements made by a buyer, that in the long term economic rationalization won’t come to dominate and that this purchasing power now clearly exercised in Canada won’t be eroded over time.
What do you fear most from this transaction in the long term?
Basically, over the long term it’s an economic deconstruction. We’re talking here of 90,000 Canadian jobs, almost 50,000 in Quebec, and a lot comes from the supplier network. Now, I was at Metro for a long time. The first time you consolidate as a wholesaler and distributor, it’s all about purchasing and ultimately economic rationalization leads you to purchase where it’s most economical to do so, and that’s not necessarily in Canada.
The other element is that Rona is also a deeply rooted player in the community. They are a major sponsor of all the Canadian Football League teams. Many Olympic athletes [they sponsor] are involved in the community. It’s very important for the country.
Why are you protecting Rona when you didn’t protect Alcan?
One has nothing to do with the other. In the case of Alcan, it was a $40-billion transaction and I would say to you that I defended Alcan. I intervened ... many months before the Rio Tinto transaction, once I realized that international companies were buying up Canadian mining companies. I intervened in Quebec.
Let me also remind you that I [ensured] the continuity agreement guaranteeing that Alcan’s head office [stay in Montreal] so long as the owner was operating in Quebec. I was successful in that case.
In the case of Rona, there is a guarantee that the head office will remain in Boucherville, and also regarding purchasing. That’s not enough?
I speak also as a Canadian, but as a Quebecker, when you examine the Loblaw acquisition of Provigo, there are many short-term promises and as long as they are kept so be it. The American Lowe’s duty is to maintain its profits .
Is it possible to block the transaction with Investissement Quebec?
I think it’s [English] too early to call that one.
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