A subsidiary of Canada Post is preparing to become Quebecois. Based in Montreal, Metro supply chain will get its hands on Groupe SCI, a major logistics services provider, for a few hundred million dollars, a transaction financed in part by Quebec and the Caisse de dépôt et placement du Québec (CDPQ) .
Founded in 1974, the Montreal company is little known to the general public. However, it is well established in North America, Europe and Asia, where it operates more than 92 sites with its approximately 6,000 employees.
Consulting services, order fulfillment, transportation and packaging solutions, the activities of the group founded and led by Chiko Nanji are set to be even more diversified with the addition of the activities of SCI, which prides itself on exploiting the “ largest Canadian network of warehouses and distribution” and which specializes in particular with large companies.
“For me, this is one of the most important elements of our second mandate: ensuring that we offer solidity, when it is required, to our Quebec companies which can have an international impact” , says the Minister of the Economy, Innovation and Energy Pierre Fitzgibbon, in a telephone interview.
It was not possible to speak with Mr. Nanji on Tuesday. He was not available for interviews. Obviously, Metro Supply Chain seems to be playing it safe since its new take must obtain the approval of the Competition Bureau. The transaction is expected to close by the end of March.
“SCI is an excellent strategic complement to our existing culture and activities,” underlines Mr. Nanji in a press release. This acquisition will strengthen our position as a true leader in strategic contract logistics services. »
The Legault government is financing the transaction to the tune of 75 million through preferred shares. For its part, the nest egg of Quebecers is reinvesting 100 million in the Quebec logistics specialist. The amount of the transaction has not been revealed, but since Quebec’s financial interventions generally represent between 20 and 25% of the total amount of the project or transaction, the acquisition of SCI should vary between 300 and 350 million. The National Bank is also involved in the financial arrangement.
By offering preferred shares, Quebec ensures that it obtains a dividend. The yield of this dividend will be revised downwards if Metro Supply Chain achieves certain objectives in terms of job creation in the province. The Legault government says this transaction should allow the creation of 400 jobs over five years in the province.
“For the company, it’s beneficial because it will provide a very reasonable cost of financing,” says Fitzgibbon. It is available as an instrument [for other companies]. »
The Caisse became a shareholder of the Quebec company in 2018. This is therefore a reinvestment in its case. According to the most recent information available – as of December 31, 2022 – the value of his investment in the company varied between 150 and 300 million.
SCI represented only about 3.5% of Canada Post’s total revenue ($7.1 billion) after three quarters in 2023. Even though the federal Crown corporation was in the red with a pre-tax loss of $442 million as of as of September 30, its subsidiary specializing in logistics was profitable.
After three quarters in 2023, SCI posted a pre-tax profit of 8 million on a turnover of 252 million. In recent years, the profitability of this division of Canada Post has nevertheless deteriorated, according to the annual reports of the Crown corporation. Canada Post says it made the decision to sell SCI last year after an “analysis of the long-term strategic plan”, which notably expects growth in the “e-commerce” niche.
Across Canada, SCI operates 26 distribution centers and 41 storage locations and eight specialized transportation centers. It has more than 3,000 employees. Its president and CEO Chris Galindo will continue to lead SCI’s operations once the company becomes part of Metro Supply Chain.
