Paul Desmarais, Canadian Magnate, Dies at 86

http://www.nytimes.com/2013/10/10/business/paul-desmarais-canadian-magnate-dies-at-86.html

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Paul Desmarais, who transformed a bankrupt bus line in a Canadian mining center into an international conglomerate with $527 billion in assets and, in the process, became one of his country’s most powerful businessmen, died on Tuesday at his country estate in the Charlevoix region of Quebec. He was 86.

His family announced the death but did not give a cause.

Mr. Desmarais’s primary corporate vehicle was the Power Corporation of Canada, originally an electrical utility whose name took on a double meaning for Canadians. His influence was immense, accrued through his financial services companies, his newspaper holdings and his close ties to Canadian prime ministers and foreign heads of state, particularly Nicolas Sarkozy, the former president of France.

Whenever cries for separatism arose in Quebec, Mr. Desmarais (pronounced DEM-ahr-ay) could be counted on to promote Canadian federalism within the province’s business community.

His critics maintained that he used that influence unfairly for the benefit of his business interests. He countered that he had enjoyed no insider’s advantage in building his empire. As a French speaker, he said, he was an outsider in the English-speaking business community of Ontario, where he was born, while being similarly disconnected in French-speaking Quebec, where English was the language of business when he arrived there in 1960.

“He attributed what success he had to the fact he was an outsider in Quebec,” said John A. Rae, an executive vice president of Power Corporation. “When you’re part of the club, he said, you don’t always see the opportunities.”

Mr. Desmarais, who was born on Jan. 4, 1927, saw his first opportunity as a member of a successful business family; his grandfather had acquired companies in and around Sudbury, Ontario, a nickel mining area. In 1951, Mr. Desmarais quit law school and bought, for one dollar, the family’s ailing bus company.

After restoring the line, the Sudbury Copper Cliff Suburban Electric Railway Company, to profitability, Mr. Desmarais used reverse takeovers and leveraged buyouts to build Provincial Transport, the largest intercity bus company in Ontario and Quebec. Using debt to his advantage would continue to be a hallmark of his approach to acquisitions.

In 1962, a strike by his bus drivers cut into Provincial Transport’s revenues. Looking to diversify, Mr. Desmarais used $12 million in cash plus millions more in debt to take control of Imperial Life Insurance. He picked it from a list of the top 20 insurance companies in Canada published by newspaper The Globe and Mail.

Soon he was making other acquisitions, including Power Corporation itself, a small Montreal electric company whose name he adopted for the conglomerate. He branched into newspapers after Roy Thomson, the Canadian press baron, suggested that he buy La Presse, a Montreal broadsheet daily. After learning it was available for $15 million, Mr. Desmarais arrived at the office of Earle McLaughlin, the chairman of the Royal Bank of Canada, where Mr. Thomson was a board member. Mr. McLaughlin, who was eating lunch at his desk, approved a loan on the spot.

Mr. Desmarais’s conglomerate at various times included Canada Steamship Lines, the paper maker Consolidated Bathurst, London Life Insurance, Canada Life Financial and mutual fund companies, among them Putnam Investments in the United States.

The conglomerate generally left its acquisitions’ management and corporate identity intact. “He believed that we were owners, not managers,” Mr. Rae said. Indeed, Power Corporation maintains so low a profile that there is no sign identifying the company outside its headquarters in downtown Montreal. Among its managers was Paul Martin Jr., who became prime minister. Mr. Desmarais’s son André married France Chrétien, whose father, Jean Chrétien, also served as prime minister

Mr. Desmarais’s influence in Europe stemmed largely from his family’s 50 percent ownership of Groupe Bruxelles Lambert, a holding company with stakes in the oil company Total, the beverage group Pernod-Ricard and the cement maker Lafarge, among other companies. Power also indirectly holds investments in China, which Mr. Desmarais first visited in the 1970s.

Mr. Desmarais turned over control of Power Corporation to his sons, André and Paul Jr., in 1996. He remained chairman of the executive committee and its controlling shareholder until his death. He is survived by his wife, the former Jacqueline Maranger; his sons; his daughters, Louise and Sophie; 10 grandchildren; and two great-grandchildren.

Mr. Desmarais was a major Canadian art collector; two wings of Montreal’s Fine Arts Museum are named in his family’s honor. He also built an exclusive golf course on his country estate.

 Though Mr. Desmarais became a pillar of Quebec’s business establishment — ranked by Canadian Business magazine as the wealthiest Quebecer, with a fortune estimated at $4.4 billion — he remained mindful of his past as an outsider there. He told The Gazette, a Montreal newspaper, “If I have done nothing else in life, I think I have proven that a French-Canadian can make it in the business community.”