Paul Desmarais' plan to withdraw gradually from the affairs of Power Corp. of Canada has been accelerated in recent months, as the lingering effects of a stroke suffered a year ago force the 79-year-old Canadian business icon to hand the reins to his sons.
"He would not any more be the leading light in doing anything significant at Power," Barrick Gold chairman and Desmarais family friend Peter Munk says in an article appearing in the June issue of Report on Business Magazine, to be distributed with most copies of The Globe and Mail tomorrow and made available at globeandmail.com.
Stints in hospitals in Canada and the U.S., and an extended convalescence caused Mr. Desmarais, chairman of the executive committee at Montreal-based Power, to miss three of six board meetings in 2005. He appeared frail at Power's May 11 annual meeting in Montreal.
Although sons Paul Desmarais Jr., 51, and André Desmarais, 49, have been co-chief executive officers of Power since 1996, their father, who has a 63-per-cent voting stake, retained most of the decision-making power. During that period, companies in the Power family executed some of their biggest acquisitions, including the purchases of London Life Insurance Co., Canada Life Financial Corp. and Mackenzie Financial Corp., in addition to amassing large positions in European giants Suez SA, Total SA and Bertelsmann AG.
Paul Desmarais Sr. has made painstaking efforts to ensure the succession at Power would be a smooth one, in contrast with the uncertainty that has plagued many family-controlled corporations facing generational change. The Desmarais sons have spent more than two decades preparing for their ultimate rise to the top.
Power Financial May Get U$747 Mln on Bertelsmann Sale
Bloomberg, 25 May 2006
Power Financial Corp., which controls Canada's biggest mutual-fund firm, may receive about 585 million euros (U$747.8 million) from the sale of Groupe Bruxelles Lambert SA's 25 percent interest in Bertelsmann AG, Europe's biggest media company.
Bertelsmann today agreed to buy back the stake owned by Groupe Bruxelles Lambert for 4.5 billion euros to thwart a proposed initial public offering. Power Financial has a 13 percent "effective interest'' in GBL, the Montreal-based company's Senior Vice President Edward Johnson said in a telephone interview.
Johnson declined to comment on how much GBL paid for its Bertelsmann stake. GBL said in a release on its Web site its Bertelsmann stake has a "book reference'' of 2.10 billion euros. He also wouldn't say if Power would record a gain from the sale.
Power Financial, run by Montreal's billionaire Desmarais family, indirectly held a 3 percent stake in Guetersloh, Germany- based Bertelsmann through a European unit's ownership in GBL, Johnson said in January. The company participated in a 2001 transaction to obtain the Bertelsmann stake, he said today.
Bertelsmann, controlled by Germany's Mohn family and owner of publisher Random House and Europe's biggest broadcaster, plans to buy back the stake after Belgian financier Albert Frere, who controls GBL, said in April he might pursue a share sale to the public. The buyback will be effective July 1, Bertelsmann said.
Frere, 80, had the right to demand an IPO starting this month as part of the transaction that gave him his stake in the company five years ago. GBL first indicated on Jan. 27 it was considering a possible stock offering of its stake.
