Skip to main content

The Globe and Mail

SNC-Lavalin to take highway division public

Highway 407

Tibor Kolley

SNC-Lavalin Inc. said Thursday it will take its highway concession division public and use the funds raised to trump a bid for a 10 per cent stake in a Toronto-area toll road made by one of Canada's biggest pension managers.

The Montreal-based construction and engineering firm said it would take the unit public through an initial public offering of subscription receipts, which will entitle the holder to a share of the new company.

SNC already owns a 16.8 per cent stake in the 407 Express Toll Route, and has the right of first refusal on the 10 per cent stake, which is held by a unit of Spanish infrastructure company Ferrovial.

Story continues below advertisement

The Canada Pension Plan Investment Board (CPPIB) said this week it would acquire Ferrovial's stake for $894-million.

Highway 407 winds around the northern edge of the Greater Toronto Area, which has a population of about 5.5 million and is Canada's largest urban area. The road opened in 1997 and was leased to private investors in 1999 by the province of Ontario. It drew revenue of $560-million in 2009.

CPPIB has become a top investor in infrastructure assets as uncertainty has gripped equity markets. The fund has also bid on the 30 per cent stake in 407 held by Australia's Intoll Group .

SNC said it filed to list the new unit - called Transaxio Highway Concession Inc. - after it learned of the CPPIB bid.

An SNC spokeswoman would not say how much of the new company would be sold in the IPO, and a copy of the prospectus was not immediately available.

Shares in the new company will be listed on the Toronto Stock Exchange. CIBC World Markets is leading the syndicate of underwriters marketing the deal, SNC said.

Report an error
Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.