The Successful Investor Hotline – Friday, October 29, 2010

Article Excerpt

SNC-LAVALIN GROUP INC., $52.10, Toronto symbol SNC, has cancelled its plan to increase its stake in Highway 407, a 108-kilometre toll highway north of Toronto. The company owns 16.77% of the 407. Earlier this month, the Canadian Pension Plan Investment Board (CPPIB) agreed to buy 10% of Highway 407 from the highway’s main shareholder, Ferrovial S.A. of Spain. Ferrovial currently owns 53% of the 407. However, SNC said it would exercise its right of first refusal and buy the shares from Ferrovial. That would have increased SNC’s stake in the 407 to 26.77%. SNC would have paid Ferrovial $894.3 million for the additional 10% of the highway. That’s the same price CPPIB had agreed to pay. To raise cash, SNC planned to sell shares in a new subsidiary called TransAxio Highway Concession Inc. TransAxio would hold 30% of SNC’s 407 stake. However, due to uncertain market conditions, SNC has dropped its plan to sell shares in TransAxio. It has also cancelled its plan…