SNC-LAVALIN GROUP INC. $52 - Toronto symbol SNC

SNC-LAVALIN GROUP INC. $52 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 152.1 million; Market cap: $7.9 billion; Price-to-sales ratio: 1.0; Dividend yield: 1,8%; TSINetwork Rating: Average; www.snclavalin.com) has agreed to sell AltaLink to Berkshire Hathaway (New York symbol BRK.B), the holding company controlled by billionaire investor Warren Buffett.

Wholly owned AltaLink provides electricity to 85% of Alberta’s population through 12,000 kilometres of power lines and 280 substations.

The company will receive $3.2 billion (or $2.9 billion after taxes). The transaction should close by the end of this year.

The sale is part of SNC’s plan to sell its less-important investments and invest the proceeds in engineering projects in areas with stronger growth potential, such as mining, water treatment and oil and gas.

Other assets SNC may soon sell include its 16.77% stake in Highway 407, a toll route just north of Toronto, and its 15.5% interest in Malta’s international airport.

The stock jumped 10% on the AltaLink news. It now trades at 21.4 times the $2.43 a share that SNC will probably earn this year.

However, SNC’s earnings could rise to $2.91 a share in 2015, and the stock trades at a more reasonable 17.9 times that forecast.

SNC-Lavalin is a buy.

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