After successfully rebuffing hostile bidder CI Fund Management Inc.’s (CI Fund) efforts to acquire control (as reported in “Big Deals” in the January issue of Lexpert), Mackenzie Financial Corporation (Mackenzie) continued the “value maximization process” which was underway at the expiry of the CI Fund offer. The process yielded at least three separate offers which were superior to the CI Fund offer, and on January 29, 2001, Mackenzie’s board and management agreed to support a takeover bid by Investors Group Inc. (IGI), a subsidiary of Power Financial Corporation. If successful, the merger will create one of the largest retail wealth management companies in Canada, with over $85 billion in assets under administration, more than double its nearest competitor.
The IGI bid values Mackenzie’s common shares at approximately $4.15 billion, of which up to $3.2 billion would be payable in cash. Under the offer, Mackenzie shareholders will receive $30 per Mackenzie share payable, at their option, in cash or in IGI shares based upon an exchange ratio of 1.2 IGI shares per Mackenzie share, being an issue share of $25 per IGI share, or in any other combination thereof, subject to an aggregate cash amount of $3.181 billion and an aggregate of 38,720,011 IGI shares being available through the offer.
For this transaction, Great-West Life, a sister company of IGI, will be investing $230 million to acquire 9,200,000 treasury common shares in IGI, while Power Financial Corporation, which owns 67 per cent of the outstanding common shares of IGI, will be investing $138.3 million to acquire 5,532,000 treasury common shares of IGI.
Investors Group is represented by Blake, Cassels & Graydon LLP whose team is led by David Jackson and includes Alan Bell, Ernest McNee, Sheila Murray, Mike Sharp, Cecile Chung, Chris Javornik, Shannon O’Hearn and Jennifer Woo (corporate and securities), Ric McIvor (banking), David Valentine (mutual funds), Paul Belanger (regulatory), Robert Kwinter (competition) and Kathleen Penny and Jeffrey Trossman (tax). The Blakes team is working under the direction of Terry Wright, Q.C., Senior Vice-President, General Counsel & Secretary of IGI.
Mackenzie relied on a team from Goodmans LLP in responding to the CI Fund’s bid, negotiating with several prospective alternative bidders and ultimately negotiating and settling the terms of a support agreement with IGI. The Goodmans team was led by Stephen Halperin and includes David Matlow, Georges Dubé, Tammy Cadsby and Don Henderson (corporate and securities), Mitchell Sherman and Carrie Smit (tax), Gale Rubenstein (regulatory matters), Daniel Gormley (competition), Alan Mark, Tom Friedland and Nando De Luca (litigation arising out of the CI Fund bid). Goodmans worked with Mackenzie Executive Vice-President, Legal, Harold Hands and Senior Vice-President, Legal, Sian Brown.