Yahoo Finance Canaccord management abandons $1.1-billion buyout bid
A management group at Canaccord Genuity Group Inc. that included the chief executive and chairman has given up a bid to privatize the independent investment dealer after failing to win enough shares and regulatory approval to satisfy their $1.1-billion offer.
The $11.25 a share bid was initially contested by a special committee of the board, which contended in February that Canaccord was being significantly undervalued by the management group.
The special committee obtained an independent valuation from RBC Capital Markets that valued Canaccord between $12.75 to $15.75 a share, or as much as 40 per cent more than the offer. However, those board members resigned citing an “irreparable” relationship with the management group that included chief executive Dan Daviau and chairman David Kassie. The special committee was replaced by new members more supportive of the management-led privatization bid.
In May, Canaccord said the bid, set to expire June 13, had been snagged by a regulatory issue with one of the firm’s foreign subsidiaries.
On June 5, Canaccord’s board, after consulting with the special committee and the company’s lawyers, recommended that shareholders reject the privatization bid and not tender their shares because the conditions of the offer were not expected to be satisfied.
Then, on June 14, it was announced that the bid was expiring without regulatory approval or sufficient support, and it was not being renewed.
The company and the management group have now entered into an agreement that includes a two-year standstill with support commitments from certain members of management to vote in favour of board-supported director nominees.
The agreement also covers reimbursement of “certain reasonable expenses” of the management group, subject to clawback in prescribed circumstances, as well as continuation of an ad hoc independent committee, if required, to consider potential value-enhancing alternative transactions.
After the management-led privatization was launched in January 2023, Canaccord attempted to find an alternative buyer. There was no interest in the whole firm, but there was reportedly interest in the wealth-management division.
Canaccord has wealth management offices in Canada, the United Kingdom, Guernsey, Jersey, the Isle of Man and Australia. The company’s capital markets division operates in North America, the U.K. and Europe, Asia, Australia and the Middle East.
Daviau and Kassie joined Canaccord, which was founded in 1950, when Canaccord merged with their firm, Genuity, in 2010.
Before forming Genuity in 2005, the investment bankers had worked at Canadian Imperial Bank of Commerce. The split with the Big Five bank caused controversy, with accusations Kassie, who had been head of CIBC’s capital markets business until 2004, and his partners raided the bank for recruits to their new firm. The lawsuit was ultimately settled.
Their management bid to privatize Canaccord Genuity, launched in January 2023, pitted Kassie and Daviau against another former CIBC executive, Jill Denham, who was on Canaccord’s original special committee of the board of directors. She resigned from Canaccord’s board in March, along with other members of the original special committee.
Denham was vice-chair of retail markets at CIBC from 2001 through 2005. Prior to that, she was a managing director and head of commercial banking and e-commerce at CIBC Wood Gundy and for a time was responsible for CIBC’s European operations based in London.
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