CAE will sell its healthcare subsidiary, in which Quebec has invested nearly $100 million, to an American buyer, the Montreal-based multinational announced Tuesday.
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Madison Industries, a Chicago conglomerate, will pay $311 million to acquire CAE Health.
According to CAE, Madison will be better positioned than them to take the division “to the next level.”
Best known for its flight simulators and flight training services, CAE has benefited from generous government subsidies for its healthcare subsidiary since its founding in 2009.
That year, CAE Santé was eligible for a $100 million loan from the Charest government, which was reduced to $70 million in 2016. In 2020, CAQ Economy Minister Pierre Fitzgibbon added a second loan of $30 million. The company used $21 million of that, bringing its total to $91 million borrowed from the state since 2009.
CAE Santé sells, among other things, simulators that imitate patients and enable students to take part in practical training. At the start of the pandemic, CAE had developed a respirator that ultimately saw very little use.
No leaders here
Despite the significant support provided by the government to CAE Santé, barely 123 of the department’s 600 employees are currently in Quebec. And none of the nine executives live here – virtually all of them live in the United States.
What happens to the loans granted by Quebec? “We transfer our obligations to the buyer,” CAE spokeswoman Samantha Golinski responded to the Journal on Tuesday.
Samatha Golinski Photo from LinkedIn
“Madison is committed to maintaining CAE Healthcare’s research and development commitments and resources [humaines] in Quebec,” she said.
Ms. Golinski assured that CAE had searched in vain for a buyer in Quebec. “We believe Madison is the best buyer,” she said.
The market applauds
Investors welcomed the news. CAE shares rose more than 2% on the Toronto Stock Exchange on Tuesday.
CAE is “monetizing a distressed asset that has been underperforming for a long time,” said Desjardins analyst Benoit Poirier.
The company will use the proceeds from the sale to reduce its debt, which stands at over $3 billion.
Last year, CAE Healthcare had an operating profit of $8 million on revenue of $193 million.
Recall that several flagships in Quebec, including Résolu, Uni-Sélect, Opsens and Logistec, have been the subject of foreign purchase offers in recent months.