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Quebec was disappointed with the recent sale of gold producer Osisko Mining to Yamana Gold Inc. and Agnico Eagle. (OSISKO MINING)
Quebec was disappointed with the recent sale of gold producer Osisko Mining to Yamana Gold Inc. and Agnico Eagle. (OSISKO MINING)

The paradox of Quebec Inc.: Eager to buy but not to sell Add to ...

Sitting in his office in Laval, Que., his back to the high windows that overlook a beautiful forest, a rarity in this disfigured Montreal suburb, Alain Bouchard is ranting. “Don’t get me started,” says the president and chief executive officer of Alimentation Couche-Tard Inc.

The object of his aversion on this sunny day is the generous amount of government aid given to the McInnis Cement plant under development in Quebec’s Gaspé region, a project spearheaded by the family of Laurent Beaudoin, chairman and former CEO of Bombardier Inc.

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Mr. Bouchard, who recently said before the Montreal Board of Trade that Quebec was the welfare bum of Canada, has as much respect for what he calls “subsidy suckers” as he does for unions – which is not a whole lot.

The outspoken executive is no less frank when he deals with European executives.

Just hours before, Mr. Bouchard spoke with Statoil SA’s CEO, and the two lamented how long it is taking to transform the Norwegian company’s former retail operations, which Couche-Tard acquired for $2.6-billion (U.S.) in 2012.

Scandinavian regulations are stiff by North American standards. “Can you believe you have to keep the windshield washer jugs in a strong box?” Mr. Bouchard says.

And while he knew what he was getting into – he quietly visited some 200 stores before Couche-Tard made its offer – he is still amazed at the business culture clash between North America and Scandinavia. “It’s like they have no sense of urgency,” he says.

Couche-Tard is part of a growing contingent of Quebec companies that have moved beyond cross-border shopping to hunt acquisitions all over the world.

Aircraft landing gear manufacturer Héroux-Devtek Inc. landed in Europe for the first time in February with the acquisition of U.K.-based landing gear maker APPH Ltd., a $124-million (U.S.) deal. The Longueuil-based company is following in the footsteps of CGI Group Inc., which doubled its size when it bought Logica PLC in 2012 for $3.2-billion (including debt), its biggest deal ever. Meanwhile, St-Laurent cheese maker Saputo Inc. went hostile for the first time in 23 acquisitions to snatch Australian dairy producer Warrnambool Cheese & Butter Factory Co. Holdings Ltd. for close to $600-million.

And it is not only large Quebec companies that are making inroads abroad. Smaller ones like Premier Tech Ltd., a sphagnum peat moss producer from Rivière-du-Loup in the Lower Saint-Lawrence region, has clinched 20 companies from Ireland to Sri Lanka since 2000.

And herein lies the paradox in a province that was traumatized by the 2007 acquisition of Alcan Inc. by mining giant Rio Tinto Group PLC and disappointed with the recent sale of gold producer Osisko Mining Corp. to Yamana Gold Inc. and Agnico Eagle Mines Ltd.

Quebec wants to erect some of the strictest defences against hostile takeovers in North America. All the main political parties at Quebec’s National Assembly – including the ruling Liberal Party – support stronger measures to protect Quebec’s companies from takeovers.

And yet, when you look more closely at the data on mergers and acquisitions, the province is much more predator than prey, KPMG-Secor concluded in a recent report. The consulting firm reviewed all transactions involving a publicly traded Quebec company worth $1-million or more between January, 2001 and July, 2013. Acquisitions abroad (402) far outnumbered the sale of Quebec firms (269) over the period. There is even a six-fold difference between what Quebeckers have bought abroad versus what foreign investors acquired in Quebec when business units are also factored in.

Over those 12 years, the value of what Quebec companies bought abroad is equal to what foreigners acquired in the province, roughly $90-billion. But if you exclude the $38.1-billion (U.S.) Alcan deal, an aberration at the peak of the commodities boom, the assertiveness of Quebec companies is apparent.

Ontario remains the province that exhibits the biggest appetite for foreign companies and business units in absolute terms. But when the size of the Quebec economy is taken into account – it has fewer companies with generally lower market capitalizations – the province’s companies are actually the most venturesome in the country, according to KPMG-Secor partner Daniel Denis.

‘You can’t stay local’

Standing in the crowded community centre of the quaint village of Port-Daniel, in the Gaspé region, Laurent Beaudoin is unfazed by the criticism his family’s new project is receiving from the local cement industry, which is crying foul over the arrival of a government-financed rival.

With McInnis Cement, his family’s biggest venture outside of Bombardier and BRP Inc., the maker of Ski-Doos and other recreational products, Mr. Beaudoin is looking at opportunities in the U.S. Northeast.

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