SNC-Lavalin drops IPO of highway unit and 407 bid

TORONTO (BestGrowthStock) – SNC-Lavalin (SNC.TO: ) said on Thursday that it would drop plans to pursue an additional stake in the 407 toll road and to take its highway concession division public, due to adverse market conditions.

Montreal-based construction company SNC already owns a 16.8 percent stake in the Toronto-area toll road and had planned to use a right of first refusal to trump a bid by the Canadian Pension Plan Investment Board to purchase a 10 percent stake in the highway.

CPPIB had offered C$894 million ($876 million) to buy the stake from Spanish infrastructure company Ferrovial (FER.MC: ), which owns about 53 percent of the highway.

SNC had planned to acquire the funds for the purchase by taking its Transaxio highway concession division public.

“While we are certainly disappointed that the market conditions at this time did not permit us to proceed with the offering on favorable terms, we continue to believe in the strong underlying value of 407,” SNC Chief Executive Officer Pierre Duhaime said in a statement.

Highway 407 winds around the northern edge of the Greater Toronto Area, which has a population of about 5.5 million. The road opened in 1997 and was leased to private investors in 1999 by the province of Ontario. It drew revenue of C$560 million in 2009.

($1=$1.02 Canadian)

(Reporting by Cameron French; Editing by Lisa Von Ahn)

SNC-Lavalin drops IPO of highway unit and 407 bid