Logistec’s stock rose nearly 30% on Tuesday in response to the establishment of a special committee to assess the Montreal-based marine and environmental services company’s strategic options.
An institutional shareholder did not hide his surprise to learn that the controlling shareholder of Logistec – the family of the founder – is now willing to sell its shares.
“I didn’t expect that at all,” said portfolio manager Stephen Takacsy of Montreal-based Lester Management.
Stephen Takacsy, however, says he has known for some time the frustration of shareholders and the Paquin family with the valuation of the stock despite the company’s “interesting” financial performance. “We’ve had the title for 17 years, and it’s never been cheaper. »
This expert claims that the company is well managed, in addition to having two “super businesses”. On the one hand, there are maritime services, on the other, environmental solutions.
“It’s worth twice the price when you look at the comparables,” argues Stephen Takacsy.
Logistec’s stock hit its highest level in five years during Tuesday’s session before closing at $55.75 on the Toronto Stock Exchange. This award gives a market value of more than 700 million to Logistec.
Logistec let it be known at the start of the long weekend that the Paquin family informed the board of directors of their interest in selling their shares. It is also one of the daughters of the late Roger Paquin – founder of Logistec – who runs the company.
The Paquins’ decision to express an interest in selling thus earned the family on paper sixty million in one day. The family’s stake in Logistec is now worth approximately $320 million.
Several scenarios are possible with the examination of the strategic options.
Selling the entire business to a single buyer, selling a single division, and selling both divisions to two different buyers are possibilities.
The latter specifies that infrastructure is in high demand and that the environmental sector is “hot”, that is to say, it is popular because of the growing attention given to ESG (environment, social and governance) factors. ) by investors.
The environmental division specializes in the management of contaminated soils and water treatment. “Logistec is in a sweet spot,” says Stephen Takacsy.
“Logistec’s business can still generate a lot of growth. There are great possibilities. »
Logistec’s stock is worth $80, he said.
Investors don’t recognize “true” value, in his view, for several reasons.
He first points out that no analyst offers official business tracking and adds that Logistec remains a small-cap stock in a “neglected” industry with businesses poorly understood by investors.
Stephen Takacsy asserts that investors know little about the maritime sector and the management of port terminals. “But it’s about infrastructure. It’s expensive. But it’s as unexciting as lashing, in the eyes of some,” he says.
Logistec generated a net profit up 18%, to 54 million, in 2022 on a turnover up 21% which approached 900 million. The billion dollar revenue is at your fingertips.
The marine services industry handled historic cargo volumes last year due to supply chain disruptions.
Activities in the environmental sector have been built from almost zero and today generate a turnover of more than 330 million.
The Paquin family is looking for a way to better reflect value, according to Stephen Takacsy.
The list of potential buyers includes, according to him, names such as Waste Connections, Green for Life (GFL Environmental), Brookfield Infrastructure, large pension funds, large American or European companies with green technologies, and even a company of consulting engineering like WSP.
Second largest shareholder in Logistec, behind the Paquin family, the Caisse de dépôt et placement du Québec is ready to collaborate in the process initiated.
“If shareholders wish to continue in this direction, the CDPQ – in its ongoing concern to promote Quebec interests – wishes to be part of the solution”, simply comments the spokesperson, Kate Monfette.
Madeleine Paquin has led Logistec for 27 years and has served on the board for 36 years. His sister Suzanne has also been a member of the Logistec board of directors for 36 years and runs a shipping company partly owned by Logistec. Their sister Nicole has been a director at Logistec for 19 years.
Logistec does not intend to comment at this time, unless circumstances warrant.
