TORONTO, March 8,
2023 /CNW/ - The Special Committee of the Board of
Directors of Canaccord Genuity Group Inc. (TSX: CF) (the "Company")
acknowledges receipt by the Company of a requisition from SKKY
Capital Corporation, a shareholder of the Company controlled by J.
Gordon Flatt, requesting that the
Company call a shareholder meeting for the purposes of removing the
current members of the Special Committee from the Board and
appointing two new directors.
The Special Committee is comprised of Gillian H. Denham (Chair), Charles N. Bralver, Dipesh J. Shah, and Sally J. Tennant, all of whom are
independent.
The Board established the Special Committee in August 2022 to review and consider the proposed
management buy-out, which was commenced by way of take-over bid on
February 27, 2023 (the "Offer") and
constitutes an "insider bid" under applicable securities laws. The
Special Committee continues to properly discharge its fiduciary
duties in ensuring that the interests of minority shareholders are
fairly considered in the context of the Offer.
As has been previously stated, the Special Committee believes
the management-led group's offer price of $11.25 per share (the "Offer Price") undervalues
the Company and the Special Committee is not prepared to recommend
in favour of it. The Special Committee's decision relied in part on
the independent valuation provided by RBC Capital Markets that, as
of February 15, 2023, and subject to
the assumptions, limitations and qualifications set forth in RBC's
written valuation, the fair market value of the common shares of
the Company is in the range of $12.75
to $15.75 per common share, or
between 13% and 40% more than the current Offer Price.
Since August 2022, the Special
Committee has engaged in discussions with the management group in
an attempt to negotiate an improvement to the Offer; however, the
Special Committee and the management group have not come to an
agreement on an improved Offer. As a result, the Special Committee
engaged Barclays Capital Canada Inc. to commence an alternative
transaction process ("Alternative Transaction Process") to explore
potential strategic alternatives to enhance shareholder value.
Shareholders should be aware that SKKY Capital Corporation is
the "Major Shareholder" referred to in the Offer that signed an
irrevocable lock-up agreement that requires it to tender its common
shares to the Offer and vote against any other transaction, even if
such transaction were to provide greater value to shareholders.
In a letter provided to the Board in August 2022, Mr. Flatt explained his rationale
for agreeing to irrevocably lock-up the shares he controls at a
price that he acknowledges does not fully recognize the value of
the Company, which he viewed as being more than $15.00 per share. Mr. Flatt stated that, in his
view, the $11.00 price offered by
management at that time was reasonable given "market uncertainties,
war, rising interest rates and inflation."
While Mr. Flatt has decided to accept the Offer, the Special
Committee must consider all shareholders and stakeholders in
fulfilling its responsibilities under its Board-authorized mandate
to assess, review and make recommendations in respect of the Offer,
and to consider alternatives available in the circumstances to
enhance shareholder value.
The Special Committee has also heard from other minority
shareholders, who believe the work of the Special Committee to
attempt to surface alternative transactions is entirely
appropriate.
The Special Committee is in the process of preparing a
directors' circular that describes the actions it has taken in
responding to the Offer, including consideration of the rationale
provided by Mr. Flatt to the Board in agreeing to irrevocably lock
up his shares to the Offer. Further details will be contained in
the directors' circular, which the Special Committee expects will
be mailed to shareholders early next week.
The Special Committee is reviewing and considering the
requisition with its independent legal and financial advisors and
will respond appropriately in due course. In the meantime,
shareholders are advised not to take any action.
ABOUT CANACCORD GENUITY GROUP INC.
Through its principal subsidiaries, the Company is a leading
independent, full-service financial services firm, with operations
in two principal segments of the securities industry: wealth
management and capital markets. Since its establishment in 1950,
the Company has been driven by an unwavering commitment to building
lasting client relationships. We achieve this by generating value
for our individual, institutional and corporate clients through
comprehensive investment solutions, brokerage services and
investment banking services. The Company has wealth management
offices located in Canada, the UK,
Guernsey, Jersey, the Isle of Man and Australia. The Company's international capital
markets division operates in North
America, UK & Europe,
Asia, Australia, and the Middle East.
Canaccord Genuity Group Inc. is publicly traded under the symbol
CF on the TSX.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This press release may contain "forward-looking information" as
defined under applicable securities laws ("forward-looking
statements"). These statements relate to future events or future
performance and reflect management's or the directors'
expectations, beliefs, plans, estimates, intentions and similar
statements concerning anticipated future events, results,
circumstances, performance or expectations that are not historical
facts, including, but not limited to: business and economic
conditions; the Company's growth, results of operations,
performance and business prospects and opportunities; the
availability of alternative transactions that may emerge from the
Alternative Transaction Process or otherwise; and the impact of the
management group's position and the significant shareholder's
irrevocable lock-up agreement on the Alternative Transaction
Process. Such forward- looking statements reflect management's
current beliefs and are based on information currently available to
management. 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, whether any alternative
transaction to the Offer may emerge, pursuant to the Alternative
Transaction Process or otherwise, and the Company's ability to
consummate such alternatives; the possibility that the management
group may not be able to obtain or satisfy, in a timely manner or
otherwise, the minimum tender of common shares, or the required
regulatory approval and other conditions necessary to complete the
Offer; the possibility that SKKY Capital Corporation is successful
in its request; market and general economic conditions (including
slowing economic growth, inflation and rising interest rates); the
dynamic nature of the financial services industry; the potential
continued impacts of the coronavirus (COVID-19) pandemic on the
Company's business operations and on the global economy; 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; and
the risks and uncertainties discussed from time to time in the
Company's interim condensed and annual consolidated financial
statements, its annual report and its annual information form
("AIF") filed on www.sedar.com as well as the factors discussed in
the sections entitled "Risk Management" and "Risk Factors" in the
AIF, which include market, liquidity, credit, operational, legal
and regulatory risks.
Although the forward-looking statements contained in this press
release are based upon assumptions that the Company believes are
reasonable, there can be no assurance that actual results will be
consistent with these forward-looking statements. The
forward-looking statements contained in this press release are made
as of the date of this press release and should not be relied upon
as representing the Company's views as of any date subsequent to
the date of this press release. Except as may be required by
applicable law, the Company does not undertake, and specifically
disclaims, any obligation to update or revise any forward-looking
statements, whether as a result of new information, further
developments or otherwise.
SOURCE Canaccord Genuity Group Inc.