Canada proxy firm Kingsdale plans U.S. push with or without M&A

By John Tilak

TORONTO (Reuters) - Canadian proxy solicitation firm Kingsdale Shareholder Services still plans to expand in the United States after merger and acquisition talks with rivals there failed to produce a deal, its top executive said on Monday.

The Toronto-based firm, majority-owned by MDC Partners Inc (NasdaqGS:MDCA - News) (MDZa.TO), was close to finalizing a deal with one potential target this year but the two sides could not reach an agreement, said Chief Executive Wes Hall, who declined to specify which company it was.

Kingsdale is now aiming to pick up market share and hire talent from some of its U.S. peers.

“We can’t just sit around and wait for an acquisition to show up. We have to start organically,” Hall said in an interview.

“Even though we’re not necessarily going out there and buying a company, we’re certainly out there actively seeking to acquire talent. That’s where we’re going to spend most of our time on.”

Kingsdale opened its first U.S. office in New York in March this year.

Hall acknowledged that it could be challenging to grow in the competitive U.S. market without an acquisition, which could provide instant access to new customers.

It is taking time for U.S. companies to recognize that the conditions for shareholder activism and other corporate governance situations are similar in the United States and Canada, he said.

Kingsdale’s U.S. customers include Citigroup (NYSE:C - News), as well as activist hedge funds Pershing Square, Jana Partners and Orange Capital, which is active in Canada.

Hall advised Bill Ackman’s Pershing Square Capital on the landmark proxy battle with Canadian Pacific Railway Ltd (Toronto:CP.TO - News). Kingsdale’s other large deals include the Jana Partners-Agrium (Toronto:AGU.TO - News) fight and BHP Billiton's (ASX:BHP.AX - News) $39 billion bid for Potash Corp (Toronto:POT.TO - News).

More hedge funds are engaging management and boards than ever before, and institutional investors are increasingly receptive to activists.

Kingsdale provides advice to both activists and companies, but its client base includes more companies than activists.

Providers of U.S. proxy solicitation services include MacKenzie Partners, Innisfree M&A Inc and Georgeson. Like Kingsdale, these firms typically advise companies on shareholder activism, hostile takeovers and corporate governance issues.

While Georgeson shuttered its Canadian business earlier this year, Hall said it would be a good potential fit for Kingsdale.

“I would love to buy the Georgeson U.S. business if it comes on the block,” he said.

(Editing by Bernard Orr)