Canaccord management abandons $1.1-billion buyout bid

financialpost.com:

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 includedchief 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