The logo for Canaccord Genuity is shown in Toronto.Staff/The Canadian Press
Unexpected regulatory issues have complicated plans for senior leaders of Canaccord Genuity Inc. to take the independent Canadian investment bank private, raising the risk that the $1.13-billion deal will not proceed.
Citing an “ongoing regulatory matter” involving one of its foreign subsidiaries, the company said early Monday that approvals required for the $11.25 per share all-cash bid to proceed likely would not be received before the bid expires on June 13. Approvals might not even come before the management group’s financing commitments – $825-million from New York-based HPS Investment Partners LLC – expire on Aug. 9, the company said.
“There can be no assurance” that the deal will be completed because of the delay, the bidding group – comprising Canaccord chief executive Dan Daviau, board chair David Kassie and roughly 50 other management-level employees – added in a separate statement. If the deal is completed, the management group said, new terms and conditions may be required.
The development represents a surprising setback for a deal that was believed to have reached its end game nearly two months ago. In March, all four members of the special committee of Canaccord’s board of directors that was reviewing the buyout offer resigned under pressure from Skky Capital Corp. Ltd., which owns an 8.8-per-cent stake in Canaccord.
Skky, a Bermuda-based fund manager controlled by Canadian financier Gordon Flatt, said on March 7 that it had “lost confidence” in the original special committee after it rejected the management group’s offer as too low. The new special committee consists of four directors, one of which – Terrence Lyons – was hand-picked by Skky.
In addition to the regulatory issue, Canaccord also announced Monday that the management takeover bid would no longer require the company to only seek rival bids for the entire business.
By removing the condition, the company can now look for potential buyers for specific Canaccord divisions, such as its lucrative wealth management business in Britain.
“One of the reasons why the last [special committee] left was their feeling that the condition against a process for parts of the company was hindering their process,” said a source close to the company, whom The Globe and Mail has agreed not to identify as the person is not authorized to comment publicly. “Although there is not much interest in all or part [of the business] right now, given this market.”
The regulatory matter that has slowed approvals for the deal is related to Canaccord’s capital markets business, the company said, and its subsidiary has made “significant enhancements to its compliance functions and significant investments in additional staff and technology” in response. Advisers for the company and the management group did not respond to requests for more details, but the source close to the company described it as “nothing serious.”
“Every single day, every single bank and investment bank has some issue like this and it is immaterial, but it does impact change of control which is why the company disclosed it,” the source said.
Canaccord expects the regulatory matter to be resolved “in the ordinary course,” the company said. In the meantime, “there is no current intention to propose the sale of any material asset.”
If the Aug. 9 financing deadline can be extended, the source close to the company said the deal still has a good chance of getting done. HPS did not immediately respond to questions on whether the investment firm would be willing to consider such an extension.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
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