What's the Risk of Losing a Significant Number of Corporate Head Offices Now Located in Quebec?

MONTREAL, QUEBEC--(Marketwired - Sept. 29, 2016) - More than six months after the fact, the sale of Rona to Lowe's, a U.S. corporation, continues to generate political controversy. This raises the question: how many large Quebec corporations are vulnerable to a foreign takeover with the consequent loss, sooner or later, of the strategic functions associated with their head offices. Such a takeover can take a so-called "hostile" or "friendly" form, depending on whether the management of the targeted company is in favour of or opposed to the transaction.

The Institute for Governance (IGOPP) is today publishing a research study, prepared by its Executive Chair, Dr. Yvan Allaire, and Director of Research, François Dauphin, which takes as its starting point the list of the FP500 (the largest Canadian corporations based on their revenues in 2015), and which defines firms as "large" where they post revenues of more than $1 billion. In 2015, some 69 firms with headquarters in Quebec qualified as "large" corporations. Of these, 45 were business corporations, of which 21 had a "controlling" shareholder or shareholders, and 24 were publicly held corporations with a dispersed share ownership.

At the end of the day, only 16 of the 69 largest Quebec corporations have no protection against a hostile takeover bid.

We conclude that the risk of losing head offices located in Quebec, while real, does not primarily stem from hostile takeovers by firms outside Quebec. Friendly transactions represent a greater risk in the current context. Finally, a market economy inevitably leads to the disappearance of companies from the group of so-called "large corporations". What is important is Quebec's entrepreneurial spirit and its ability to renew the stock of large corporations with decision-making centers in Quebec.

The report contains three specific recommendations.

Download the full report (PDF)

About IGOPP

Created in 2005 by two academic institutions (HEC Montréal and Concordia University - The John Molson School of Business), by the Stephen Jarislowsky Foundation, and by the Autorité des marchés financiers, the Institute for Governance (IGOPP) has become a centre for excellence on the governance of public and private organizations. Through research, training programs, policy papers and participation in public debates, IGOPP has become a key reference on all issues of governance in the private and public sectors.