SNC Lavalin to sell minority stake in 407 highway

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SNC Lavalin to sell minority stake in 407 highway

Bloomberg reported on July 31st that SNC-Lavalin Group (SNC) is poised to sell its stake in the most profitable toll road around the world, the highway 407 in Toronto. According to analysts, the sale could fetch as much as C$3 billion ($2.8 billion).

SNC recently changed its strategy to focus on engineering and construction and to create shareholder value by selling mature infrastructure concession assets, such as 407 International, the operator and concessionaire of the road.

SNC agreed to sell its AltaLink power-transmission unit to Berkshire Hathaway Inc. for C$3.2 billion in May. SNC then bought oil services group Kentz Corporation in June for $1.97 billion.

SNC's CEO said last month that company planned to decide on its 407 International stake in the "mid-term -- one to three years."

SNC spent C$175 million in 1999 for an equity stake of about 23 % in 407 International and sold around 6 % of its holding in 2002 for C$178.2 million. SNC now owns about 17 %, Spain's Ferrovial owns 43 % and Canada Pension Plan Investment Board (CPPIB), 40 %.

Andre Bourbonnais, CPPIB's senior vice president of private investment, said in an e-mail to Bloomberg analyzing a potential acquisition of SNC's stake:

"We would be interested in considering the purchase of any additional interest that became available, through the right of first refusal provisions that are available to existing investors or otherwise."

407 International has a 99-year concession since 1999 to operate the 108-kilometer (67-mile) bypass around Toronto.SNC is also part of a concessionaire building an eastern expansion of the highway that will probably open to traffic by the end of 2015.

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