It seemed like the world upside down this week, as the two former CEOs leading Quebec's main opposition parties came out swinging against a sweet deal for shareholders while the brain surgeon running the province left it to a junior cabinet rookie to spread the don't-worry-be-happy joy.
This is just one of the ironies in Lowe's friendly $3.2-billion takeover of Quebec hardware icon Rona Inc., almost four years after the North Carolina-based home-reno giant's hostile bid for the chain was unanimously panned by panicking politicians during a provincial election campaign.
Back then, Liberal premier Jean Charest's government declared Rona a "strategic asset" whose sale "would be not be in Quebec's interest." But current Liberal Premier Philippe Couillard didn't even deign to comment on Wednesday, when Lowe's won over Rona's since-reconstituted board with an offer worth twice the retailer's stock price. Instead, Mr. Couillard sent out his new Economy Minister to insist that blocking the deal "would not be in Quebec's interest."
The minister in question, Dominique Anglade, used to be president of the Coalition Avenir Québec, and was seeking a seat for that party in the 2012 election. The CAQ opposed the 2012 Lowe's offer, just as it opposes the current tie-up. But Ms. Anglade has since switched sides.
She might have been singing a different tune, even as a Liberal, had Raymond Bachand replaced Mr. Charest as leader. Mr. Bachand was finance minister during the 2012 bid. As a former sovereigntist and head of the Quebec Federation of Labour's Solidarity Fund, he shared the nationalist and interventionist reflexes of the Parti Québécois, to which he once belonged.
But Mr. Bachand, who strongly opposed the 2012 Lowe's bid, lost the Liberal leadership to Mr. Couillard. During the 2013 leadership campaign, Mr. Couillard, whose nationalist reflexes are the least reactive of any recent Quebec premier, criticized his rival's handling of the Rona bid: "We sent a signal to the international market saying that we weren't open to investment."
That was an open invitation for Lowe's to try again after Mr. Couillard took office in 2014, ousting Pauline Marois's short-lived PQ government that promised (but never delivered on) a host of measures aimed at preventing hostile takeovers of Quebec-based firms.
One of those never-enacted measures involved creating a $10-billion fund at the Caisse de dépôt et placement du Québec to buy equity stakes in local companies vulnerable to foreign takeovers. The pension-fund manager has a dual mandate to earn the best return for its deposit holders and foster Quebec's economic development. By happily tendering its 17-per-cent stake in Rona to Lowe's now, it shows which mandate its current Liberal masters favour.
The Caisse is prone to expensive bursts of economic nationalism followed by long periods of contrition. Toronto-based Loblaw was blocked in its attempt to buy Quebec supermarket icon Steinberg's in the 1980s. Instead, the Caisse backed local entrepreneur Michel Gaucher in a debt-heavy deal that soon went bust. But a decade later, Loblaw won the Caisse's blessing to buy Provigo, which had ended up with about half of Steinberg's stores when the chain was dismantled.
Just as with Rona now, Quebec secured promises from Loblaw that the Provigo name and head office would survive, and that the Toronto-based owner would favour Quebec-based suppliers. But some guarantees wither with time, and it's possible that Lowe's, which is most interested in Rona's corporate-owned big-box stores, will eventually cut Rona's affiliated dealers loose. Their stores are too small to fit with the high-volume, low-margin big-box model. That may be the most controversial part of the Lowe's takeover, one that makes dealers and politicians wary.
Still, the next election isn't until late 2018. PQ Leader Pierre Karl Péladeau, who as Quebecor chief executive got the Caisse's backing to buy cable giant Vidéotron in 2000 and thwart a bid by Toronto-based Rogers Communications, may make a nationalist fuss about the Rona deal. But having made countless acquisitions outside Quebec himself, he is a poor advocate for protectionism.
Besides, most of Quebec's best-known corporate ambassadors – including Quebecor, Bombardier, Alimentation Couche-Tard, Power Corp., CGI Group and Jean Coutu Group – are insulated from hostile takeovers by virtue of their dual-class share structures. Metro and SNC-Lavalin are more vulnerable. But Transat A.T., which CAQ Leader François Legault co-founded and ran until 1997, is protected by rules that require Canadian ownership of domestic airlines.
Economic nationalism is subject to cyclical ebbs and flows. Lowe's showed abysmal timing in 2012, but it couldn't have picked a better moment to make up for it.