Canadians chuckling as takeover shoe changes feet
Where are the Mounties when you need them? Canadians have started to buy US companies, prompting some of the American targets to cry "foul."
For example, Conoco Inc., in a letter to its shareholders concerning a proposed $2.55 billion merger offer made by Seagram, a montreal-based company, said the offer ". . . escalates the continued Canadianization of America's natural resources to a new and more dangerous level." Seagram denies the charge.
At the same time, Cities Service, after the Calgary, Alberta-based Nu-West Group bought 7.2 percent of the oil company and said it was looking for more, complained to Congress that ". . . certain opportunistic Canadian companies -- aidded and abetted by Canadian banks -- can fearlessly conduct raids on United States companies."
Opportunistic or not, there is no doubt that Canadian companies have looked south of the border to expand this year. Last week, in the shadow of the Seagram offer, Canada Cement offered $315 million for General Portland Inc., which rebuffed the Montreal-based company.
Earlier in the year Brascan acquired 20.5 percent of Scott Paper after being repulsed by F. W. Woolworth, and Canadian Pacific Enterprises unsuccessfully tried to swallow hobart. Also, hiram Walker Resources bought the Marvin Davis oil interest in the Western United States for $600 million.
Most Canadians are amused at Conoco's and Cities Service's charges, since for many years it was US companies that inhaled smaller Canadian companies. Today, US companies, particularly in the energy area, are limited in the amount of Canadian interests they can maintain. Canadians note with a chuckle that the shoe is on the other foot. US companies, however, are not laughing and complain that they can't expand in Canada, whereas the Canadian companies have no restrictions in the US.
The Canadian companies are heading south, says William S. Snook, senior vice- president and general manager of the Royal Bank of Canada, because of a realization that ". . . there are limitations that any company can expect in the way of growth in Canada. When a company with cash says, 'What can I buy?' it finds there is not much in size to buy, but when it looks at the US, it sees a lot of opportunities."
A banker with a major Canadian investment banking company agrees, adding, "canadian companies have already undergone a lot of mergers. The Canadian anti- trust laws are not as stringent as they are in the US. For a strong Canadian company, the US is a logical place to expand."
Canadian real estate companies realized this several years ago and moved into the US real estate market. In a coup, Olympia & York, a Toronto developer, bought a considerable amount of real estate in New York City during the depressed real estate market in 1976. Today, that real estate has escalated in value.
Seagram had earlier talked to St. Joe Minerals about a possible merger. These plans were scrapped, however, after St. Joe made it clear it would fight the attempt.
It was all bread and water on Wall Street last week. The Federal Reserve Board continued to keep the nation on a stringent diet of high interest rates. Unhappy investors pulled away from the stock market and prices plummeted. At the end of the holiday-shortened week, the Dow Jones industrial average had lost 33.68 points, closing at 959.19. Conoco inc. was the most active stock, rising in r eaction to the Seagram tender offer.