CAW questions Caterpillar takeover of Electro-Motive
Financial details of takeover never made public
The head of the Canadian Auto Workers is suggesting Caterpillar Inc. may not have followed foreign takeover rules in its 2010 purchase of the London, Ont., locomotive plant it has since shut down.
CAW national president Ken Lewenza has written a letter to Industry Minister Christian Paradis, calling on him to release the financial details of Caterpillar's takeover of Electro-Motive Canada.
The federal government has said that the takeover was never looked at by Investment Canada because it fell under the $300-million threshold required by the Investment Canada Act.
But Lewenza said no public independently verifiable data supports that claim and Caterpillar's own financial statement reported $1.3 billion US in assets associated with the takeover.
Caterpillar purchased Electro-Motive in 2010 for $820 million in cash from a pair of private equity firms. At the time, Electro-Motive also operated plants in LaGrange, Ill., and San Luis Potosi, Mexico, in addition to the plant in London. Electro-Motive opened a second U.S. plant in Muncie, Ind., later in 2010.
The valuation of each individual plant was not revealed by Caterpillar at the time.
"Unless this data is divulged and independently authenticated, we're simply taking Caterpillar's word for it that this acquisition was not subject to Investment Canada review," Lewenza said in his letter to Paradis.
The U.S.-based heavy equipment maker announced last week that it will close its Electro-Motive plant in London, a month after it locked out about 450 workers.
Lewenza said that if the value associated with Caterpillar's purchase of Electro-Motive turns out to be inaccurate, the government can impose penalties, including annulling the acquisition.
Call to amend takeover rules
In his letter, Lewenza called for changes in Canada's foreign takeover rules, echoing sentiment from others on both sides of the political spectrum.
He called for increased transparency in the "ultra-secretive" Investment Canada process, and more clearly defining the "net-benefit" test which takeovers have to fulfil.
Lewenza also called on the government to close loopholes that he says exempt most takeovers from scrutiny, either through being "too small" or by being part of larger purchases.
"That's no way to deal with powerful, self-interested corporations like Caterpillar. Corporations cannot be left to police themselves."
With files from The Canadian Press