Canada’s Genstar Gets $1.56-Billion Bid

Genstar, a Canadian-controlled building materials and financial services concern with headquarters in San Francisco, received a $1.56-billion takeover bid Monday from Imasco Ltd., Canada’s leading tobacco company. Imasco, which also owns drugstores and restaurants in the United States, offered $54 (Canadian), or $38.60 at current exchange rates, for each of Genstar’s 40.4 million common shares and equivalents outstanding.

Imasco said the bid was conditioned on the company acquiring at least a majority of Genstar’s voting stock.

Genstar issued a brief statement, saying that its board will hold a special meeting “in the near future” to consider the “unsolicited” offer. Genstar added that over the weekend it had held talks with Imasco but said “no agreements or understandings were reached.”

However, Imasco said it had already reached an agreement with Genstar’s biggest stockholder group--Societe Generale de Belgique SA, a Belgian holding company, and affiliated companies--giving Imasco the option to buy the group’s shares for $54 each. The group owns 6.76 million, or about 16.7%, of Genstar’s stock.

“We sincerely hope that Genstar will view our proposal in the same favorable light (that) our proposal has received from Genstar’s largest shareholder group,” Paul Pare, Imasco’s chairman and chief executive, said in a statement.

Genstar said it first became aware of Imasco’s interest after financial markets closed Friday, when speculation was high that a bid for Genstar might emerge and Genstar’s common stock soared $6 a share. The stock slipped 50 cents a share to $39.75 in New York Stock Exchange composite trading Monday.

Western Canada Operations

Genstar makes cement and building materials and is involved in land development and marine and financial services. It also owns 40% of SCA Services, a waste-disposal concern that Genstar and Waste Management jointly acquired in 1984.

Although Genstar’s headquarters is in San Francisco, many of its corporate functions are handled in Vancouver, Canada, and the company has extensive operations in western Canada.

Imasco is the Montreal-based parent of Imperial Tobacco, whose major brands of cigarettes include Player’s and du Maurier. It also owns Shoppers Drug Mart, a leading drugstore chain in Canada. In the United States, it is perhaps best known for Hardee’s, a 2,538-store chain of fast-food restaurants, and Peoples Drug Stores, an 824-store chain that it acquired in early 1985.

BAT Industries, the British tobacco company that owns the Saks Fifth Avenue and Marshall Field department stores in the United States, also holds 44% of Imasco’s stock.

Imasco’s drugstores and restaurants reflect its continuing effort to expand beyond tobacco because of price cutting in the Canadian cigarette market, which has kept downward pressure on Imasco’s profit margins.

Pare acknowledged that it “is well known that we have long been seeking a fourth leg, preferably in Canada, to add to our existing businesses.”

“Our interest is particularly drawn to the financial services component of Genstar, the most important element of which is Canada Trustco Mortgage Co.,” Pare said. Genstar acquired Canada Trustco last year.

In 1985, Genstar earned $171.2 million (Canadian) on revenue of $2.34 billion. In its fiscal year ended March 31, 1985, Imasco earned $234 million (Canadian) on revenue of $3.63 billion.