The board of Canadian financial services firm Canaccord Genuity Group has recommended that shareholders reject the proposed C$1.1bn (£700m, $820m, €770m) management buyout of the firm.
In a statement on the Toronto Stock Exchange on 5 June, the board voiced its concern the conditions of the offer were unlikely to be satisfied by its expiry date next week, on 13 June, due to a “regulatory condition”.
In early May, Canaccord flagged a regulatory issue associated with one of its capital markets businesses, which it said at the time might result in it failing to gain approval for the management offer on “an expedited basis”.
On 8 May, after news of the regulatory issue broke, Canaccord’s shares fell by over 13% to C$9.
Canaccord said at the time the snag was unrelated to the buyout, and it expected the matter to be resolved in the “ordinary course” without material impact on the subsidiary’s financial condition or results of operations.
However, the announcement added: “The management offerors have agreed it will no longer be a condition of the management offer that the company not commence any process, proposal, plan or intention related to the sale of a material asset of the company.”
Yesterday’s (5 June) statement explained that without an extension of the offer to permit the regulatory condition to be satisfied, the board could not recommend its acceptance.
The board added its recommendation followed consultation with the company’s special committee of independent directors, and its legal counsel.
The takeover group, which comprises CEO and president Daniel Daviau, chair David Kassie, and all members of its global operating committee, is offering C$11.25 per share, which represented a 30.7% premium to the firm’s closing share price on 6 January.
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