Werba Reinhard Holdings Acquires Loring Ward

Loring Ward International Ltd. completed a plan of arrangement on January 23, 2009 pursuant to which Werba Reinhard Holdings Ltd., a subsidiary of Werba Reinhard, Inc. (WRI), acquired all of the outstanding shares of Loring Ward for a cash purchase price of US$11.25 per common share, for a transaction value of approximately $108.6 million. The transaction was the culmination of approximately two years of proxy fights, an abandoned insider bid and the signing of four merger agreements.

Loring Ward provides in its core business a turnkey asset management program to American investment advisors and their clients. These services include investment strategies and products, back office operational processing, education and training and business development support.

A special committee of Loring Ward's board of directors was constituted in early 2007 to, among other things, review and evaluate an expected unsolicited proposal by WRI, which resulted in a comprehensive strategic review and auction process that culminated in the plan of arrangement.

In January 2007 the board of directors of Loring Ward received an unsolicited letter from parties related to WRI seeking to acquire all of the outstanding shares of Loring Ward Group, Inc., an indirect subsidiary of Loring Ward. After due consideration, the board of directors rejected the proposal, as well as a subsequent revised proposal received later that month.

Members of the WRI group continued to acquire securities of Loring Ward and in both February of 2007 (by way of a letter to the board of Loring Ward) and March 2007 (by way of press release, at an offer price of $12 per share) announced the intention to make a bid to acquire all the outstanding securities of Loring Ward. The special committee again rejected the offer due to, among other reasons, a low offer price, a condition of exclusive dealing, an absence of committed financing, excessive tender conditions and key shareholder lock-ups.

In January 2008 representatives of the WRI group met with Loring Ward and expressed a willingness to acquire all the outstanding shares of Loring Ward not already owned by them for a price in the range of $12.50 to $15.25 per share. Following appropriate consideration, Loring Ward, in consultation with its financial advisors, rejected the proposal as inadequate.

In February 2008 WRI group issued a press release and filed an early warning report announcing its intention to make a formal offer for all the outstanding shares of Loring Ward at a price of $13.75 per share. In response to this announcement, the board of directors of Loring Ward formed another special committee to, among other things, review and evaluate WRI group's expected unsolicited proposal and to consider alternative proposals and strategic alternatives.

In March 2008 Loring Ward announced that it was engaged in discussions with the WRI group and the Ontario Securities Commission with respect to the insider bid valuation requirements of applicable securities laws and that, in connection with Loring Ward's strategic review process, it had entered into preliminary discussions and signed confidentiality agreements with a number of interested parties who had expressed an interest in acquiring Loring Ward.

Later that same month, WRI group announced its decision not to proceed at that time with any proposed unsolicited offer, and, further, that it intended to send Loring Ward shareholders a dissident proxy circular proposing a new slate of nominees to replace Loring Ward's existing board of directors at the next annual meeting.

From February to May 2008 Loring Ward, under the direction of the special committee, together with BMO Capital Markets, its financial advisors, identified and engaged in discussions and negotiations with a number of interested parties. One of these parties was Friedman, Fleischer & Lowe Capital Partners II, L.P. (FFL), an investment fund managed by Friedman, Fleischer & Lowe, LLC, a San Francisco-based private equity firm.

In June 2008, following the completion of its auction process, Loring Ward entered into an arrangement agreement with FFL pursuant to which one of FFL's subsidiaries would acquire, by way of a plan of arrangement, all the outstanding shares of Loring Ward at a cash price of US$16.50 per share.

In early July 2008 Loring Ward received a superior proposal from WRI to acquire all the outstanding shares of Loring Ward at a cash price of US$17.30 per share, on terms substantially similar to those of the FFL deal. FFL exercised its right to match with a counter offer of US$17.35, and on July 14, 2008 Loring Ward entered into an amended and restated arrangement agreement with FFL at the US$17.35 offer price.

WRI then made a further superior proposal at US$18 per share, which FFL declined to match. Accordingly, on July 30, 2008, the FFL arrangement agreement was terminated, Loring Ward paid FFL a transaction break fee and Loring Ward entered into an arrangement agreement with WRI pursuant to which an affiliate of WRI was to acquire all of Loring Ward's outstanding shares under a plan of arrangement at a price of US$18 per share in cash.

However, due to the extraordinary global equity market declines, the WRI arrangement agreement was terminated on October 31, 2008 on the day it was scheduled to close, following a decline in Loring Ward's assets under management and administration by more than 20 per cent between June 30, 2008 and the date of the expected closing. It was a condition of the arrangement agreement that assets under management not decline by more than 20 per cent. The WRI arrangement agreement was terminated despite both parties' efforts to renegotiate the WRI arrangement agreement, the fact that shareholders of Loring Ward had overwhelmingly approved the WRI transaction at US$18 per share, and the fact that the Ontario Superior Court of Justice had issued a final order in respect thereof.

After a period of negotiation between the parties, in light of the global financial crisis, on November 12, 2008, Loring Ward entered into the definitive arrangement agreement pursuant to which WRI would acquire, by way of a plan of arrangement, all the outstanding shares of Loring Ward at a price of US$11.25 per share. Following a second meeting of Loring Ward shareholders to approve the second WRI arrangement agreement and a further final order from the Ontario Superior Court of Justice, the transaction closed on January 23, 2009.

WRI was represented by Fogler, Rubinoff LLP with a team that included Grant Sawiak and Rick Moscone. Loring Ward was represented by Stikeman Elliott LLP with a team that included Simon Romano, Donald Belovich, Janene Charles and Jonah Mann. FFL was represented by Blake, Cassels & Graydon LLP with a team that included John Kolada, Mike Sharp, Cynthia Sargeant, Jeff Trossman, Paul Stepak and Seumas Woods, and by US counsel Bingham McCutchen LLP, with a team that included Neil Townsend, James Sommer and Tony Carbone.