Canaccord management group aims to buy company in $1.13 billion deal, but tensions rise over price

Canaccord management group aims to buy company in .13 billion deal, but tensions rise over price

Canaccord management group aims to buy company in $1.13 billion deal, but tensions rise over price

Top executives at Canaccord Genuity Inc. want to take Canada’s independent investment bank private, even though a special committee of the company’s board of directors believes the price is too low.

Canaccord Genuity Inc. Inc.’s management team announced an all-cash buyout offer of $11.25 per share early Monday, valuing the financial services company at approximately $1.13 billion. HPS Investment Partners LLC of New York, Canaccord’s largest individual shareholder, has agreed to provide up to $825 million in financing to support the deal.

In response, Canaccord’s board of directors has formed a special committee to examine the proposal of the management team, which includes the chairman of the board, David Kassie. The committee, made up of three board members who are not part of the bidding team, has not agreed to support the bid, it said in a statement, pending the results of a formal appraisal being prepared by Royal Bank of Canada. .

Discussions between management and the special committee continue as of August 2022, although the committee said it was not ready to accept an offer of $11.25 per share based on RBC’s preliminary analysis and subsequent negotiations have failed to reach an agreement.

While the offer represents a nearly 42 percent premium to Canaccord’s average 20-day stock price, it’s also roughly 32 percent below the company’s November 2021 price target of $16.52 a share. For investors who participated in Canaccord’s 2004 initial public offering at $10.25 per share, the offering represents a yield of less than 10 percent.

“The public markets undervalue the business given its exposure to a cyclical capital markets environment,” the team behind the takeover bid said in a statement. “This has been compounded by a turbulent 2022 in the capital markets and is expected to continue as long as common stocks are publicly traded.”

Collectively, the group of bidders owns slightly more than 21 percent of Canaccord’s common stock. Including about 11 percent of outside shareholders who have signed agreements to support the offer, the offer is supported by investors who currently own nearly one-third of Canaccord’s common stock.

Investors representing at least 75 percent of Canaccord’s total common shares must approve the sale for the private transaction to go through, the petitioning group said. If that happens, the plan is to delist Canaccord from the Toronto Stock Exchange “as soon as possible,” the group said, which would end nearly two decades as a public company.

Daniel Daviau, Canaccord’s longtime chief executive and a member of the bidding team, said in a statement that the company’s shares “have been shown to be unsuitable for trading on a public market.”

As an employee-owned business, Mr. Daviau said Canaccord “will only be able to focus its efforts on advancing proven strategies in the best interests of its clients.”

More to come

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