Canaccord Genuity managers seek to take firm private in $1.13-billion deal
Group includes CEO, chairman and more than a dozen other senior executives, who own combined 21% of shares
A group comprised of members of Canaccord Genuity Group Inc.‘s management team is proposing to take over the company with an all-cash bid worth about $1.127 billion.
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The management-led group said the offer values the company at $11.25 per common share. It said this represents a 30.7 per cent premium for shareholders to the closing price of $8.61 per common share on Jan. 6 and a 41.9 per cent premium to the 20-day volume-weighted average price of $7.93 per common share on the Toronto Stock Exchange for the period ending on Jan. 6.
The group, which currently collectively owns around 21.3 per cent of shares, includes the investment banking and financial services company’s president and chief executive, chairman, global operating committee and additional senior and tenured employees.
“The common shares, which naturally reflect the inherent volatility of the global capital markets in which the company operates have proven to be not well-suited for trading in a public marketplace,” Canaccord Genuity’s president and chief executive, Daniel Daviau, said in a press release on Monday.
The company’s shares are down 42 per cent over the past year. In its latest earnings report in November, the Canadian broker-dealer recorded a year-over-year decline of 32.5 per cent in its capital markets revenue, driven by a sharp decline in underwriting volumes.
Daviau said after the completion of their offer, the firm would be able to focus its efforts solely on serving the best interests of its clients.
Upon the transaction’s completion, all common shares will be indirectly held by the company and its subsidiaries’ officers and employees. The group said its executive leadership, management, underlying corporate structure and operations are not expected to materially change.
In a press release, the company said a special committee its board of directors formed to evaluate the proposal will fully respond to the offer in due course. It said the offer will not formally commence until the takeover bid circular has been filed and mailed. The offer will remain open for acceptance for a minimum of 105 days.
“Shareholders are cautioned that there can be no assurance that the proposed offer or any other transaction will be completed,” it said, adding that the special committee has not agreed to recommend that shareholders accept the proposed offer and is awaiting a formal valuation by Royal Bank of Canada.
The company said its special committee has discussed the proposal with the management group and have advised them that it was not prepared to support an offer of $11.25 per common share based on preliminary financial analyses.
The management group said there’s a “potential downward impact” to the common share price if the offer is not accepted. It said the group believes common shares would trade below the offer price if this happens.
Canaccord initially became a public company listed on the TSX in June 2004 and on the Alternative Investment Market of the London Stock Exchange a year later. In 2010, Canaccord Financial Inc. acquired and merged with Genuity Capital Markets, a leading independent advisory firm at the time. It was officially renamed Canaccord Genuity Group Inc. in October 2013.
Canaccord Genuity has been growing its wealth management business. In October 2021, its U.K. division completed the acquisition of the private client investment management business of Adam & Company, which commences its entry into the Scottish market.
By the end of 2021, it also completed its acquisition of Sawaya Partners, a leading independent mergers and acquisitions advisory firm to the consumer sector based in New York. Last year, its U.K. wealth management business also acquired Punter Southall Wealth Limited.
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