CF Canaccord Genuity Group Inc

• Offer Price of C$11.25 in cash per Common Share, represents a 41.9% premium to the 20-day VWAP on January 6, 2023 (the last trading day prior to the public announcement of the Offer); Offeror group is led by Canaccord Genuity's executive leadership with the support of its largest external Shareholder, among others, holding in the aggregate 21.3% and 10.7% of the outstanding Common Shares, respectively.
  
  
• Opportunity for immediate liquidity and certainty of value for redeployment of capital at a compelling valuation; surfaces value in a security that is underperforming in the public equity markets.
  
  
• RBC valuation range is highly theoretical, unrealistic and flawed.
  
  
• Shareholders can tender their Common Shares now by contacting Kingsdale Advisors at 1-866-581-0512 (North America) / 1-416-867-2272 (International) or by e-mail at contactus@kingsdaleadvisors.com.
  
  
• Offer remains open until June 13, 2023 until 11:59 p.m. (EST), unless accelerated, extended or withdrawn.

TORONTO, Feb. 27, 2023 /CNW/ - 1373113 B.C. Ltd. (the "Offeror") announced today that it has formally commenced the previously announced all-cash offer (the "Offer"), on behalf of itself and a management-led group consisting of officers and employees of Canaccord Genuity Group Inc. ("Canaccord Genuity" or the "Company") (TSX: CF) and its subsidiaries (collectively, the "CG Employee Group", and together with the Offeror, the "Offerors"), to acquire all of the issued and outstanding common shares of the Company (other than certain common shares beneficially owned by the CG Employee Group) ("Common Shares") at a price of C$11.25 per Common Share (the "Offer Price").

The notice and advertisement of the Offer is being published in accordance with applicable Canadian securities laws and the Offer and take-over bid circular and related offer documents (the "Offer Documents") have been filed with Canadian securities regulatory authorities and are available under Canaccord Genuity's SEDAR profile at www.sedar.com. The Offer Documents will be mailed to all holders of Common Shares ("Shareholders").

"We are pleased to be proceeding with our formal offer, which provides immediate certainty of value and liquidity for Shareholders at a substantial premium in a volatile market," said Dan Daviau, President and CEO of the Company. "The Offer has received strong support from the Company's largest independent Shareholders, in addition to the most senior and tenured executives and employees of the Company, who share our view that becoming a wholly employee-owned business will allow us to intensify our focus on driving client success, while retaining our independence. Regardless of the outcome of this offer, senior management will remain committed to ensuring that the Company continues to provide the outstanding service we strive to deliver to the Company's clients and will continue to seek the best possible results for the Company's clients and its Shareholders."

Subsequent to the January 9^th public announcement of the Offer, the special committee of independent directors of the Company (the "Special Committee") instructed RBC Dominion Securities Inc. (the "Valuator") to prepare a formal valuation of the Common Shares (the "RBC Valuation"), in accordance with applicable Canadian securities laws and as further described below. Following a detailed review and consideration of the Valuator's methodologies, the Offeror maintains that the valuation range determined by the RBC Valuation overlooks and fails to account for reasonable and appropriate adjustments and as a result, is highly theoretical and presents a valuation range that is unrealistic, unachievable in the foreseeable future and not adequately supported as realizable values for Shareholders. Conversely, the Offer Price of C$11.25 per Common Share has the full support of independent external Shareholders who, over several years have become intimately familiar with the Company's operations, its operating environment, and its future prospects. In addition to the over 50 senior employees who have already joined the CG Employee Group, over 150 additional employees have expressed a desire to the Offerors to join the group, subject to the Offeror obtaining the Requested Exemptive Relief (as defined below).

REASONS TO ACCEPT THE OFFER

The Offeror strongly believes the Offer is compelling and in the best interests of the Shareholders and the Company, and encourages Shareholders to consider the following factors, among others, when making the decision to accept the Offer:

• Significant Premium. The Offer Price represents a 30.7% premium to the closing price of C$8.61 per Common Share on the Toronto Stock Exchange, and a 41.9% premium to the 20-day volume-weighted average price of C$7.93 per Common Share for the period ending, on January 6, 2023 (the last trading day prior to the announcement by the Offeror of its intention to make the Offer). The Offer Price is the result of multiple rounds of negotiations with Shareholders and the Special Committee. Price discussions among certain members of the CG Employee Group and the Company's largest external Shareholder (the "Major Shareholder") began "in the C$10s", following which the Major Shareholder agreed to execute a "hard" lock-up agreement in support of a transaction at C$11.00 per Common Shares and an initial proposal to the board of directors of the Company (the "Company Board") was then made at that price; negotiations with the Special Committee ultimately resulted in an increased Offer Price to C$11.25 per Common Share.
  
  
• Represents Virtually all of the Offerors' Equity in the Company Resources. The CG Employee Group, as employees of the Company and its subsidiaries, are rolling nearly the entirety (96.6%) of their equity in the Company, and have therefore committed significant portions of their personal net worth to the successful completion of the Offer.
  
  
• Liquidity, Certainty of Value and Ability to Redeploy Capital. The Offer immediately crystalizes full and certain value to Shareholders by providing for 100% cash consideration for the Common Shares, giving depositing Shareholders, on completion, certainty of value and immediate liquidity. Further, the Offer provides depositing Shareholders the ability to fully monetize and de-risk their investment and, ultimately, redeploy their capital into the market.
  
  
• Exposure to the Capital Markets Cycle and the Company's Complex and Diverse Business Results in Comparative Discount in Public Markets. Over the past five-year period, despite execution of a multi-year strategy to diversify the Company's business mix while materially growing stable sources of earnings contributions, the Company has not been successful in attracting and retaining sufficient shareholder support and its forward price-to-earnings multiple has been consistently and materially lower than that of the Company's peers, in part due to its significant exposure to the capital markets cycle and the market's lack of support for its diverse business mix. This suggests that the public markets value the Company at a meaningful discount to its peers in part due to such characteristics of the Company's business, irrespective of management and the Company Board's ongoing efforts to diversify and grow the business. Over the past five (5) years, the Company has traded at an average 4.1x price-to-earnings discount relative to its peers.
  
  
• Support of Shareholders. Certain Shareholders, including the Major Shareholder and several of the Company's other long-term Shareholders, have entered into lock-up agreements pursuant to which they have agreed to deposit under the Offer all Common Shares held, representing in the aggregate approximately 10.7% of the issued and outstanding Common Shares as of the date hereof, subject to certain terms and conditions of such agreements. Further, the lock-up agreement with the Major Shareholder is a "hard" lock-up agreement, which will not terminate even in the event of a competing proposal that provides for the acquisition of 100% of the Common Shares at a price per Common Share that is greater than the Offer Price.
  
  
• Continuing Ownership by Current Management. 1394025 B.C. Ltd. (the parent company of the Offeror) ("Holdco") and the Offeror will, following completion of the Offer, be wholly owned by the CG Employee Group, which is comprised of current management and senior employees of the Company and its subsidiaries and who in the aggregate own 21.3% of the issued and outstanding Common Shares as of the date hereof. None of the members of the CG Employee Group are, in their capacities as Shareholders, interested at this time in participating in any alternative transaction, if one were available, involving any sale of their interest in the Company or in any acquisition by a third party of the Company or any of its material assets. Furthermore, the Offer was announced approximately seven (7) weeks ago and, to the Offeror's knowledge, no third party has expressed any interest in making a competing offer. Accordingly, the Offeror does not anticipate that the Company will receive any executable competing offers at or exceeding the Offer Price.
  
  
• Potential for Negative Impact to Common Shares if Offer Not Accepted. The Offer represents a significant premium to the market price of the Common Shares prior to the public announcement of the Offeror's intention to make the Offer. If the Offer is not successful, and no other offer is made for the Company, the Offeror believes the Common Shares would trade below the Offer Price and would continue to trade in a way that reflects the inherent volatility of the global capital markets and the limited liquidity of the Common Shares. Historic precedents for unsuccessful management and insider transactions illustrate that, on average, target company share price performance during the six-month period following terminations of transaction discussions with management and insider groups have resulted in target share price deterioration of 34% relative to announced offer prices. The Offeror notes that the aggregate fees payable and to be paid to legal and financial advisors retained by the Special Committee and to members of the Special Committee are likely to be significant. These costs will be borne by the public Company, and should the Offer be unsuccessful, will result in reduced financial resources available to the public Company for the ultimate benefit of its Shareholders.
  
  
• Potential for Negative Impact to Workforce Retention if Offer Not Accepted. While senior management remains committed to the Company, the Offeror views a return to the status quo as presenting a significant risk to the stability of the Company's workforce, which is made up of highly mobile and sought-after investment and financial professionals, in what will then be a depressed Common Share price environment. In addition to the over 50 senior employees who have already joined the CG Employee Group, over 150 additional employees have expressed a desire to the Offeror to join the group. Accordingly, the Offeror views this potential instability within the Company's workforce and the shareholder value destruction associated therewith to be a material risk in the event that the Offer is not accepted. In these circumstances, the Offeror expects that the Company would be required to establish significant retention programs at a cost which will be borne by Shareholders.
  
  
• Fairness Opinion. Pursuant to an engagement letter between Raymond James Ltd. ("Raymond James") and the Offeror, Raymond James delivered to the Offeror an opinion (the "Raymond James Fairness Opinion") to the effect that, based upon and subject to the assumptions and limitations set forth therein and certain other considerations in connection with the preparation of the Raymond James Fairness Opinion, as of January 8, 2023, the consideration payable pursuant to the Offer is fair, from a financial point of view, to the Shareholders (other than the Offerors, their affiliates and joint actors). The full text of the Raymond James Fairness Opinion, setting out the scope of review, assumptions made, matters considered and limitations on the review undertaken by Raymond James, will be attached as Appendix A to the take-over bid circular.
  
  
• Fully Financed All-Cash Offer. The Offeror will satisfy the funding requirements of the Offer pursuant to a fully committed debt financing thereby eliminating any financing risk.

UNREALISTIC AND FLAWED VALUATION

As required by Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions, the Company, represented by the Special Committee, retained the Valuator to prepare the RBC Valuation and an associated fairness opinion. While the RBC Valuation indicates that the Valuator is of the opinion that as of February 15, 2023, the fair market value of the Common Shares is in the range of C$12.75 to C$15.75 per Common Share, the Offeror strongly urges Shareholders to review the RBC Valuation carefully and critically and consider the significant limitations thereof, including the inability, or failure, to take into account certain adjustment factors in determining the range of fair market value.

• Unrealistic RBC Valuation. In valuing the Common Shares, the Valuator solely utilized a highly theoretical "sum of the parts" methodology by aggregating the Valuator's assessed value of each of the Company's business segments as a part of the whole and arrived at a valuation range that is unrealistic and not adequately supported as realizable values for Shareholders. The RBC Valuation does not provide Shareholders with details of other relevant and customary en bloc valuation methodologies, such as a precedent transaction analysis, an analysis of trading multiples of comparable public companies, a consolidated discounted cash flow analysis, a price-to-earnings multiple benchmarking analysis, a price to book value benchmarking analysis and a research analyst target pricing analysis. The combination of these different analytical methodologies would have provided Shareholders a comprehensive and more realistic lens, through which to view the Offer and the premium consideration which has been offered thereunder. The Offeror believes that each of these other customary methodologies would illustrate a significantly lower range than presented in the highly theoretical and unachievable "sum of the parts" methodology used by the Valuator.
  
  The Valuator's highly theoretical valuation methodology implies that the Company's individual operating entities, which rely on, among other things, revenue platform synergies, shared underlying assets and resources, and a shared infrastructure associated with operating the collective business, could somehow realize enhanced value for Shareholders if the Company's business segments were to be "sold off for parts". In particular, the Valuator's valuation of the Company's Canadian wealth business demonstrates a significant misunderstanding of the inherently integrated nature of the wealth business with the Canadian capital markets business.
  
  In the Offeror's view, even initiating a process to explore a piece-by-piece sale of the Company's business units would be value destructive, in that it could potentially result in a widespread exodus of the Company's employees, clients and assets, and fails to consider several limitations that would exist in respect of any alternative sale transaction including:
  
  
• adverse tax implications together with other transaction leakage considerations that could limit the benefits derivable from the monetization of standalone business segments;
  
  
• execution risks including, among other factors, market conditions, timing of potential business unit sales, valuation uncertainties, that would impact the level of execution capability and reduce the potential to maximize realized value;
  
  
• meaningful negative synergies that would result from the breakup of the Company's combined business segments triggered by both lost revenue that would have been generated pursuant to the Company's cross-selling strategies and increased costs resulting from the need for each segment of the Company to individually replicate the necessary operating infrastructure; and
  
  
• broader alternatives including major sales or spin-offs are inherently complex in nature and entail meaningful execution risk, leakage and tax structuring considerations that corrode realizable value for not only the business unit subject to any such sale but also any remaining assets. These potential value-reducing risks are amplified by the disaggregation of a business that derives substantial synergies and cross-selling opportunities from an integrated system of assets and infrastructure.

       In addition to the foregoing, the RBC Valuation:

• does not take into account the liquidation preference associated with the convertible preferred shares and preferred shares in respect of the Company's U.K. wealth business (the "CGWM U.K. Preference Shares") and therefore applied a 67% as-converted equity interest to the valuation of that business, which, in the Offeror's view, does not reflect a realistic current valuation. The implication of this liquidation preference is that it reduces the net proceeds available to the Company on a sale of the U.K. wealth business (such liquidation preference being subject to a potential multiplier if a sale occurs before July 2026) as it would require payment of such amounts to the holders of the CGWM U.K. Preference Shares. Based on the valuation of the U.K. wealth business in the RBC Valuation, the liquidation preference as of the date of the report would reduce the value of the Company's interest in the U.K. wealth business by approximately C$166 million, resulting in an overstatement by the Valuator of C$1.58 per Common Share, at the low end of the range, and approximately C$112 million, or an overstatement by the Valuator of C$1.07 per Common Share, at the high end of the range, thus bringing the valuation range of the Common Shares down to C$11.17 to C$14.68 per Common Share;
  
  
• applies an unrealistic multiple to the Company's Canadian wealth business. The RBC Valuation indicated that the value of the Canadian wealth business was within the range of C$7.75 to C$9.00 per Common Share which reflects a valuation of C$810 million to C$941 million, equating to a value equivalent in the range of 2.34% to 2.71% of assets under administration ("AUA"), respectively, which were last reported to be C$34.7 billion. This significantly differs from applicable historical transactions in Canada that have been completed at an average of 1.5% of AUA¹, and from published research on the Company which applies a rate of 1.0% of AUA². As a result, utilizing the mid-point of 1.25% of AUA, the Offeror believes the valuation of the Canadian wealth business in the RBC Valuation overstates the real value by approximately C$377 million, or an overstatement by the Valuator of C$3.60 per Common Share, at the low end of the range, and C$508 million or an overstatement by the Valuator of C$4.85 per Common Share, at the high end of the range, thus bringing the valuation range down to, collectively with the other downward adjustments noted above, C$7.57 to C$9.83 per Common Share;
  
  
• primarily relies on a discounted cash flow analysis to determine the value of unallocated capital expenditures, corporate leasehold improvements and additional regulatory capital requirements (the "Other Unallocated Corporate Cash Flow Items"), but overstates the amount on the low end of the range by approximately C$20 million which appears to be a calculation error. As a result, the Offeror believes the RBC Valuation overstates the implied equity of the Company by C$0.20 per Common Share, thus bringing the range down to, collectively with the other downward adjustments noted above, C$7.37 to C$9.83 per Common Share;
  
  
• unilaterally excludes management's assumptions made in the management-prepared unaudited operating models for the Company for the fiscal years 2024 to 2027 in respect of annual contingency costs which were in the range of C$10 million to C$25 million per year, without making any other appropriate and necessary adjustments to the corresponding discount rate used. It appears that the Valuator selectively excluded these costs which were determined by management to be appropriate and necessary provisions in light of management's historical experience and insight into the business and its operations in order to increase the RBC Valuation. Using a 50% premium to the Valuator's discount rates for the purposes of this calculation (i.e., a discount rate of 15% to 18% compared to a discount rate of 10% to 12% selected by the Valuator), the Offeror believes the RBC Valuation overstates the implied equity of the Company by C$0.75 per Common Share at the low end of the range and C$0.70 per Common Share at the high end of the range, thus bringing the range down to, collectively with the other downward adjustments noted above, C$6.62 to C$9.13 per Common Share; and
  
  
• incorrectly applied the Valuator's conservative estimate for the repurchase price of the publicly listed preferred shares of the Company (the "Preferred Shares") of C$214 million or C$2.05 per Common Share to the high end of its valuation range and applied its aggressive estimate for the repurchase price of the Preferred Shares of C$166 million or C$1.60 per Common Share to the low end of its valuation range. By definition, the low end of a valuation range reflects conservative estimates for both assets and liabilities and the high end of a valuation range reflects aggressive estimates for both assets and liabilities. Accordingly, the Offeror believes the RBC Valuation overstates the low end of the valuation range by C$48 million or C$0.45 per Common Share and similarly understates the high end of the valuation range by the equivalent amount, thus, collectively with the other downward adjustments noted above, bringing the lower end of the range down to C$6.17 per Common Share and bringing the higher end of the range up to C$9.58 per Common Share.

In summary, taking into account the reasonable and appropriate adjustments described above (and as summarized in the table below), the fair market value for Common Shares pursuant to an en bloc "sum of the parts" valuation methodology would reflect a range of C$6.17 to C$9.58 per Common Share. The Offeror notes that this adjusted range is generally consistent with the trading price for the Common Shares in the period prior to the announcement of the intention to make its Offer. 

The Offer Price of C$11.25 per Common Share represents senior management's view that the Company is worth more on an en bloc consolidated basis than a sum of the parts liquidation sale of each of the reported business segments of the Company.

• RBC Valuation is an Outlier Compared to Peers. The valuation range determined by the RBC Valuation is materially higher than the valuation ranges provided by each of the four (4) independent equity research analysts³ prior to the date of the announcement of the intention to make the Offer. Even where the research analyst opted to provide an alternate "sum of the parts" valuation for theoretical comparison, the resulting valuation range provided by such analyst was also materially lower than the valuation range determined by the RBC Valuation. These analysts, which have covered the Company for many years and are employed by firms that trade a significant proportion of the Company's shares, have a profound, nuanced understanding of the Company's business, strategy, and operating environment, and published their conclusions unhindered by the inherent bias of (i) an existing bid in the market, or (ii) having been retained by a special committee of independent directors whose objective is to increase the possible consideration under the Offer.
  
  
• Execution of RBC Valuation Sale Methodology Risks Destroying Shareholder Value. The Offerors currently own 21.3% of the Common Shares and, consistent with the view of certain other outside Shareholders, believe that any proposed sale of any material assets of the Company would be value destructive as the remaining public Company would be ill-suited for the public markets. It is a condition of the Offer that the Company Board, including any of its committees, does not commence any process in respect of a proposed sale of any material assets of the Company. Should the Special Committee engage in a process to attempt to sell any material assets of the Company, the Offeror may have no choice but to withdraw the Offer and resist any such proposed asset sales through any means possible to preserve value for all Shareholders. The Offerors believe that such a sale process is value destructive in and of itself, highly unlikely to yield a valuation in the range contemplated by the RBC Valuation, risks a massive talent drain, and is inexecutable within the timeframes contemplated by the Offer, if at all. It would not be in the best interests of the Company and would be an ill-conceived strategy designed solely to thwart the Offer.

ABOUT THE OFFER

The Offer is open for acceptance until 11:59 p.m. (Eastern Standard Time) on June 13, 2023, unless extended, accelerated or withdrawn.

As specified in further detail in the Offer Documents, the Offer is subject to certain conditions including, but not limited to: that the Common Shares validly deposited to the Offer, and not withdrawn, that together with the Common Shares held by Holdco or the Offeror or to be transferred to Holdco or the Offeror pursuant to the Co-Bidding Agreement (as defined below), shall represent at least 75% of the then-outstanding Common Shares (on a fully-diluted basis, excluding any performance share options and restricted share units ("RSUs") that do not vest and/or are not exercisable until after the 56^th day following the first take-up of Common Shares under the Offer); all convertible securities of the Company, including the RSUs and performance share options of the Company ("PSOs", and together with the RSUs, "Convertible Securities"), shall have been exercised in accordance with their terms, or if not exercised, be adjustable in accordance with their terms at the sole discretion of the Company Board on terms satisfactory to the Offeror, provided that the Company Board shall not have caused the vesting of any outstanding Convertible Securities to be accelerated and no Common Shares held by any of the employee benefit trusts administered or established by the Company or its subsidiaries thereof have been tendered to the Offer; the receipt of all necessary governmental, regulatory and third party approvals (as outlined in the Offer Documents); no material adverse effect shall have occurred; there shall not have been a failure to wind up Canaccord Genuity Wealth Group Holdings Ltd. into, or amalgamate Canaccord Genuity Wealth Group Holdings Ltd. with, the Company; the Offeror shall not have become aware, through any public announcement or otherwise, of any intention of Shareholders beneficially owning, in the aggregate, greater than 1% of the issued and outstanding Common Shares, to exercise dissent and appraisal rights in connection with any subsequent compulsory acquisition or other subsequent acquisition transaction; and other customary conditions, as further described in the Offer Documents. Subject to applicable law, the Offeror reserves the right to withdraw, accelerate or extend the Offer and to not take up and pay for any Common Shares deposited under the Offer unless each of the conditions of the Offer is satisfied or, where permitted, waived by the Offeror at or prior to the expiry of the Offer.

The Offer is not subject to any financing conditions, and the consideration payable pursuant to the Offer will be financed pursuant to the financing commitment from HPS Investment Partners, LLC (on behalf of certain funds or accounts managed, advised or controlled by HPS Investment Partners, LLC) (collectively, "HPS Investment Partners") for an interest-bearing senior secured first lien term loan facility in an aggregate principal amount up to C$825 million, subject to the satisfaction and/or waiver of certain conditions, to complete the Offer and any subsequent compulsory acquisition or subsequent acquisition transaction, as applicable (the "Debt Financing").

Shareholders are strongly encouraged to read the Offer Documents carefully and in their entirety since they contain additional important information regarding the terms and the conditions of the Offer as well as detailed instructions on how Shareholders can tender their Common Shares to the Offer.

Shareholders who have questions or require assistance in depositing Common Shares to the Offer should contact Kingsdale Advisors, the depositary and information agent for the Offer, at 1-866-581-0512 toll free in North America, at 1-416-867-2272 outside of North America or via email at contactus@kingsdaleadvisors.com.

Copies of the Offer Documents filed with the Canadian securities regulatory authorities are available electronically without charge under Canaccord Genuity's profile on SEDAR at www.sedar.com or at www.CGEmployeeGroup.com.

ABOUT HOLDCO, THE OFFEROR AND THE CG EMPLOYEE GROUP

Holdco and the Offeror are corporations incorporated in British Columbia. Currently, Holdco owns all of the outstanding shares of the Offeror and Daniel Daviau owns all of the outstanding shares of Holdco.

The CG Employee Group is comprised of Daniel Daviau, David Kassie (Chairman and director), Jeff Barlow (President, Canaccord Genuity LLC (US)), Patrick Burke (President, Capital Markets, Canaccord Genuity Corp. (Canada)), David Esfandi (Chief Executive Officer, Canaccord Genuity Wealth Management (UK & Europe)), Marcus Freeman (Chief Executive Officer, Canaccord Genuity Group (Asia-Pacific)), Fera Jeraj (Chief Technology Officer), Don MacFayden (Executive Vice President and Chief Financial Officer), Jason Melbourne (Global Head of Distribution), Jennifer Pardi (Global Head of Equity Capital Markets), Adrian Pelosi (Executive Vice President, Chief Risk Officer & Treasurer, Canaccord Genuity Group Inc.), Stuart Raftus (Executive Vice President and Chief Administrative Officer and President, Canaccord Genuity Wealth Management (Canada)), Nick Russell (Chief Executive Officer, Capital Markets Canaccord Genuity Limited (UK & Europe)), Andy Viles (Executive Vice President and Chief Legal Officer), Mark Whaling (Global Head of Securities) and additional senior employees, each of whom is an officer and/or employee of the Company and/or a subsidiary thereof. Subject to the receipt of the Requested Exemptive Relief (as defined below), the Offeror intends to approach certain officers and/or employees of the Company and/or its subsidiaries prior to expiry of the Offer to become additional Offerors ("Additional Co-Offerors") pursuant to the execution of joinders to the Co-Bidding Agreement. Each Additional Co-Offeror will, under the terms of the Co-Bidding Agreement, agree to exchange for common shares in Holdco ("Holdco Shares") all Common Shares owned as of January 9, 2023 and any Common Shares acquired through ordinary course settlement of outstanding Convertible Securities thereafter and prior to expiry of the Offer.

Holdco, the Offeror and the CG Employee Group entered into a co-bidding agreement dated as of January 9, 2023 (the "Co-Bidding Agreement"), in order to, among other things, facilitate the organization of Holdco and the Offeror, the making and structuring of the Offer and the post-closing governance of Holdco and the Offeror. Pursuant to the Co-Bidding Agreement, the parties have agreed to, among other things, make the Offer and use commercially reasonable efforts to consummate such other transactions such that the Offeror becomes the owner of all of the outstanding Common Shares. In addition, following the first take-up of Common Shares under the Offer, it is expected that the Offerors will cause the Company Board to be reconstituted and that such reconstituted Company Board will take such actions as are necessary and permissible (i) to provide that the RSUs will, upon vesting, become entitled to be settled Holdco Shares, (ii) exchange the limited number of PSOs that are expected to be outstanding for options to acquire Holdco Shares, and (iii) accelerate and vest the outstanding cash-settled executive employee deferred share units and performance share units of the Company, and to thereafter direct the after-tax cash proceeds payable upon the settlement of such cash-settled equity awards to Holdco as the aggregate subscription price of, and subscribe for, such number of Holdco Shares for a price equal to the Offer Price.

Further details as to the material terms of the Co-Bidding Agreement are described in the Offer Documents.

ADVISORS AND DEPOSITARY AND INFORMATION AGENT

Stikeman Elliott LLP is acting as legal advisor to the Offerors in respect of the Offer and Canadian legal matters in respect of the Debt Financing. Shearman & Sterling LLP is acting as legal advisor to the Offerors in respect of the Debt Financing and U.S. legal matters in respect of the Offer. McCarthy Tétrault LLP and Kirkland & Ellis LLP are acting as Canadian and U.S. counsel, respectively, to HPS Investment Partners in connection with the Debt Financing.

Kingsdale Advisors is acting as depositary and information agent to the Offeror.

ADDITIONAL READER ADVISORIES

This news release does not constitute an offer to buy or an invitation to sell, or a solicitation of an offer to sell or invitation to sell, any of the securities of Canaccord Genuity. The Offer is made exclusively by means of, and subject to the terms and conditions set out in, the Offer Documents. While the Offer will be made to all Shareholders, the Offer will not be made or direct to, nor will deposits of Common Shares be accepted from or on behalf of Shareholders in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction.

Holdco and the Offeror have applied to the applicable Canadian securities regulatory authorities for exemptive relief from certain provisions of National Instrument 62-104 – Take-Over Bids and Issuer Bids in relation to the Offer, the Co-Bidding Agreement, irrevocable undertakings provided in favour of Holdco and the Offeror by certain holders of shares in the capital stock of Canaccord Financial Group (Australia) Pty Ltd., and certain transactions contemplated therein (the "Requested Exemptive Relief"). As noted above, it is a condition to the Offer that the Offeror receives the Requested Exemptive Relief. 

MARKET AND INDUSTRY DATA

This news release includes market and industry data that has been obtained from third party sources, including industry publications. The Offeror believes that the market and industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Offeror has not independently verified any of the data from third party sources referred to in this news release or ascertained the underlying economic assumptions relied upon by such sources.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This document contains "forward-looking statements" (as defined under applicable securities laws). These statements relate to future events or future performance and reflect management's expectations, beliefs, plans, estimates, intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements include, but are not limited to, statements regarding: the Offer, including the anticipated timing, mechanics, funding, completion, settlement, results and effects of the Offer; the Offeror's objectives, strategies, intention, expectations and plans for Canaccord Genuity; the ability of the Offerors to complete the transactions contemplated by the Offer; reasons to accept the Offer and the expectation that such reasons continue to be prevailing; the purpose of the Offer; expectations regarding the availability of any exemptions under applicable securities laws, including the Requested Exemptive Relief and, if granted, the scope of and conditions to such relief; risks and challenges facing the Company; Additional Co-Offerors, if any, and the terms on which such Additional Co-Offerors will participate as an Offeror; and any other statements that are not material facts. Such forward-looking statements reflect the Offeror's current beliefs and are based on information currently available. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", "target", "intend", "could" or the negative of these terms or other comparable terminology.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and a number of factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements. In evaluating these statements, readers should specifically consider various factors that may cause actual results to differ materially from any forward-looking statement. These factors include, but are not limited to, market and general economic conditions (including slowing economic growth, inflation and rising interest rates), the dynamic nature of the financial services industry and the risks and uncertainties and the potential continued impacts of the coronavirus (COVID-19) pandemic on the Company's business operations and on the global economy, and the impact of the war in Ukraine and the resulting humanitarian crisis on the global economy, in particular its effect on global oil, agriculture and commodity markets.

Although the forward-looking information contained in this document is based upon what the Offeror believes are reasonable assumptions, there can be no assurance that actual results will be consistent with those expressed or implied by such forward-looking statements. The forward-looking statements contained in this document are made as of the date of this document and should not be relied upon as representing views as of any date subsequent to the date of this document. Except as may be required by applicable law, the Offeror does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking information, whether as a result of new information, further developments or otherwise. 

None of the Offerors, or any of their respective subsidiaries, affiliates, associates, officers, partners, employees, representatives and advisers, makes any representation or warranty, express or implied, as to the fairness, truth, fullness, accuracy or completeness of the information contained in this document or otherwise made available, nor as to the reasonableness of any assumption contained herein, and any liability therefore (including in respect of direct, indirect, consequential loss or damage) is expressly disclaimed. Nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future and no reliance, in whole or in part, should be placed on the fairness, accuracy, completeness or correctness of the information contained herein.  

REQUIRED EARLY WARNING INFORMATION

As a result of the  execution of the Co-Bidding Agreement and the terms thereof, the Offerors collectively own or exercise control or direction over an aggregate of (i) 21,138,019 Common Shares, representing approximately 21.3% of the issued and outstanding Common Shares, and (ii) 5,575,339 RSUs and 4,987,000 PSOs, representing, together with the Common Shares owned by the Offerors or over which the Offeror's exercise control or direction, 30.4% of the Common Shares on a partially-diluted basis.

The Offeror intends to acquire all of the issued and outstanding Common Shares pursuant to the Offer other than Common Shares owned by or on behalf of the Offerors or any of their affiliates or joint actors (excluding Common Shares elected to be tendered to the Offer, beneficially held by the CG Employee Group in a registered or other deferred profit sharing or savings plan, or otherwise issued and sold for the purposes of income taxes payable in connection with the settlement or exercise of share-settled equity awards). Subject to certain conditions, if a sufficient number of Common Shares are tendered and taken-up, the Offeror may choose to acquire the remaining Common Shares not tendered in the Offer through a compulsory acquisition or subsequent acquisition transaction.

The address of the Offeror is c/o Suite 1700, Park Place, 666 Burrard Street, Vancouver, British Columbia, Canada V6C 2X8. The Company's head office is located at Suite 2200, 609 Granville Street, Vancouver, British Columbia, Canada  V7Y 1H2.

An updated early warning report will be filed by the Offeror, on behalf of itself, Holdco and the CG Employee Group, in accordance with applicable securities laws and will be available on SEDAR at www.sedar.com or may be obtained directly from the Offeror upon request pursuant to the contact details below or from Christina Marinoff at 1–416–869-7293.

SOURCE 1373113 B.C. Ltd.