The Ontario municipal employees pension fund expects to capitalize on an aging population that needs health care with its offer to buy Montreal-based software company Logibec Groupe Informatique Ltee.(TSX:LGI).
The Ontario Municipal Employees Retirement System is offering $231.4 million for Logibec and plans to take the company private if the deal goes ahead this summer.
Logibec has business software for financial information and software for managing patient information and records, said Paul Renaud, president and CEO of OMERS Private Equity Inc.
"When I think about health care and the demographic that's out there, you just can't help but think that it's a good industry to invest in," Renaud said Thursday from Toronto.
"Just look at the amount of spending that's going on in the health-care industry," Renaud said.
OMERS plans to expand the company's presence in Canada and also in the United States, where Logibec's software runs administrative systems and manages clinical information involved in elder care and assisted homes for the elderly.
Renaud said the American market is fragmented and he expects opportunities for acquisitions to build on the base that Logibec already has in the U.S.
Renaud said Logibec has proven technology that OMERS, which stands for the Ontario Municipal Employees Retirement System, will it will continue to develop.
OMERS is interested in the health care industry because of the demographic shift and the above-average growth opportunities it will bring, he said.
Through an acquisition subsidiary called OPE LGI Inc., OMERS is offering $26 cash for each Logibec share, about 17 per cent above the stock's closing price on Wednesday.
Logibec shares were up $3.51 or almost 16 per cent, $25.76 in trading Thursday on the Toronto Stock Exchange.
Two significant blocks of shares have agreed to tender their shares to the offer.
Societe generale de financement du Quebec, a provincial agency, has agreed to tender its shares in Logibec — representing about 5.4 per cent of the total outstanding.
Logibec president and CEO Claude Roy and his family have also agreed to tender their shares, representing 23 per cent of the total.
Roy intends to resign after the deal closes, but OMERS expects to keep most of the other senior management of the company.
"The time has now come for a new group of owners to sponsor the next stage of the company's growth," Roy said in a statement.
"Our vision from the outset has always been to build Logibec into a Quebec-based North American leader."
OMERS owns Canada's largest medical laboratory company, LifeLabs, which provides more than 50 million medical tests a year for patients and doctors and employs 3,000 people across Canada.
The pension fund bought the business, formerly owned by MDS Inc. (TSX:MDS), about three years ago for $1.3 billion when MDS restructured to focus on other businesses.
Last fall, OMERS-owned Maxxam acquired the British Columbia-based lab company Cantest Ltd., including its laboratory locations in Victoria and Winnipeg.
Maxxam, owned by OMERS' private capital unit, is Canada's largest independent analytical lab company, with expertise in environmental laboratory services, petroleum services, food safety and sciences and forensic and DNA services.
OMERS is one of Canada's largest pension plans, with more than $47 billion in assets invested around the world in stocks, bonds, real estate, infrastructure and private equity.
The fund provides retirement benefits to more than 390,000 current and former employees of more than 900 municipal governments, school boards, libraries, police and fire departments, children's aid societies and other local agencies throughout Ontario.