Transportation Management

"While Desmarais was moving to Montreal, Transportation Man¬ agement was fulfilling its role. Smaller local and inter-city bus lines in rural Quebec, including those in Levis, Rouyn-Noranda and Sha- winigan, and those serving areas outside municipal Montreal, were bought and brought into Transportation Management. Paul Desmarais was now master of Quebec’s bus transportation industry. Desmarais’s taste for growth was fully developed now; he was on the verge of making the transition that would set him on the path to control of Power Corporation. But that wasn’t where he was con¬ sciously heading. Paul Desmarais was in transportation — that was his opportunity. His vision was to build his empire on transportation, to reach the heights of Canadian corporate position and power by conquering time and space in Canada and the United States. He would build a bus transport network that spanned North America by acquiring interstate bus lines in the United States, then expand from Ontario into Western Canada. But Desmarais quickly learned he was casting covetous eyes on Greyhound territory, and Greyhound wasn’t going to let him in. He had hit a big wall of competition, the entrenched interest of a large, wealthy, continental operation that had the economic power to break him if he were foolish enough to engage it in head-on competition."

"In late 1964, to gain majority control of Gelco, Desmarais sold to Gelco, for $7.8 million, the assets of Transportation Management, less the shares it held in Gelco. In payment, Gelco issued enough Gelco shares to Desmarais and Parisien to cover the purchase, raising their total holdings in Gelco to 80 percent. No cash changed hands."

"which in turn held 51.2 percent of Imperial Life, worth $10.2 million. Transportation Management also held a minority interest in Trans- Canada Corporation Fund (tccf), as well as a portfolio of other speculative and blue-chip investments. Overall, as president and chair¬ man of Gelco, Desmarais commanded a corporation worth a minimum of $20 million, invested in companies with $406 million in assets."

"Transportation Management in turn owned wholly the assets of Provincial Transport, worth about $7.8 million; 50 percent of Gelco, worth about $2 million, which in turn held 51.2 percent of Imperial Life, worth $10.2 million. Transportation Management’s investment portfolio also held, among other investments, shares worth about $2 million in Trans-Canada Corporation Fund, the investment and hold¬ ing company dominated by J. L. Levesque, with investments of $66 million."

"By the end of 1965, Desmarais’s Gelco acquisition plan would be near enough completion that it could be seen for what it was — brilliant in its conception of interlocking wheels within wheels, yet simple in its execution, exemplifying the clarity of vision that seized upon the opportunity. The strategy had been formed because, as quickly as he had acquired 50 percent control of Gelco (as senior in the partnership that controlled the holding company), and as quickly as the redirected Gelco investment portfolio had furthered Desmarais’s ambitions, suc¬ cess wasn’t happening fast enough for him. After Gelco bought control of Imperial Life, Desmarais paused in the acquisition and growth game to consolidate what he had already acquired. To recap: at this point, Transportation Management owned wholly the assets of Provincial Transport, worth about $7.8 million; 50 percent of Gelco, worth about $6 million (at a cost of $2 million)."