SNC-Lavalin to Study Sale of AltaLink Stake and IPO

SNC-Lavalin Group Inc. will consider selling all of its AltaLink unit as well as listing a minority stake on the stock market, Chief Executive Officer Robert Card said.

SNC has received a “tremendous volume of inbound calls” from interested parties since saying Sept. 30 it had hired Morgan Stanley and Royal Bank of Canada to help it explore options for the power-transmission unit, Card said today on a conference call. Even as it’s moving forward with the work necessary to complete an initial public offering of a minority stake, SNC will begin a “formal process” for the sale of 100 percent of AltaLink in mid-November, the CEO said.

“We will determine which of these alternatives to pursue as both processes evolve based on the outcome that will generate the maximum value for the company and our shareholders,” Card said.

AltaLink could be worth C$10.44 to C$23.38 per SNC share, or C$1.58 billion ($1.52 billion) to C$3.54 billion, Maxim Sytchev, an analyst with Dundee Capital Markets, said in an e-mail. He recommends investors buy SNC stock.

SNC, Canada’s biggest engineering and construction company, gained 1.6 percent to C$44.52 today, its biggest single-day gain since Oct. 1. The stock has gained 10 percent this year, beating the 7.3 percent advance of Canada’s benchmark Standard & Poor’s/TSX Composite Index.

AltaLink operates and maintains about 12,000 kilometers (7,500 miles) of transmission lines and 280 substations in the western Canadian province of Alberta. The company, founded in 2002, owns more than half of Alberta’s transmission grid and serves 85 percent of its population.

Regardless of which option is chosen, a transaction involving AltaLink could be completed by the start of next year’s fourth quarter, Card said today.

Card made the comments after SNC reported a third-quarter loss and “challenging” projects in its backlog.

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