A major shareholder of Canaccord Genuity Group Inc. is trying to force out a quartet of directors who are standing in the way of a leveraged buyout by management of the Canadian financial firm.
(Bloomberg) — A major shareholder of Canaccord Genuity Group Inc. is trying to force out a quartet of directors who are standing in the way of a leveraged buyout by management of the Canadian financial firm.
Skky Capital Corp. has requisitioned a shareholder meeting to remove Gillian Denham and three other board members, according to a statement Tuesday. They make up a special board committee that’s examining a proposal by dozens of executives and employees to take Canaccord private for C$11.25 a share.
The committee, which is led by Denham, has refused to endorse the plan, saying the price is too low and that an assessment by Royal Bank of Canada places the firm’s value as high as C$15.75 per share. Last week, the group said it has hired Barclays Plc to explore strategic alternatives.
Skky, which says it owns 8.8% of Canaccord, calls that a mistake and wants the company sold in one piece.
The shareholder’s move adds a new element of uncertainty to the increasingly acrimonious fight over Canaccord, which offers investment banking, trading, research and wealth management services, primarily in Canada and the UK. It’s one of the last sizable independent firms of its kind to be listed on the Toronto Stock Exchange after large banks consolidated the industry through acquisitions.
Canaccord shares were little changed at C$11.27 as of 10:17 a.m. in Toronto.
Barclays’ mandate reportedly “includes reviewing strategic alternatives, including piecemeal divestiture of business units, which could cause the current general bid for the company to be abandoned and likely also prevent any superior bids,” Skky said in the statement. “The divestiture of all of the assets in a single transaction to a single buyer (such as the management group) offers deal certainty at an attractive valuation.”
Skky wants a shareholder meeting by May 10 to remove Denham and the other special committee members — Charles Bralver, Dipesh Shah and Sally Tennant. It proposed two nominees of its own for the reconstituted board, the statement shows.
Skky’s chief investment officer is Gordon Flatt, a Bermuda-based accountant who’s also an investor in energy, mining and real estate assets, according to his biography on the website of another Canadian company, Strategem Capital Corp., where he’s listed as a director.
A Canaccord spokesperson didn’t respond to requests for comment by phone and email outside business hours. An external representative for the special committee couldn’t immediately comment.
The management bid values Canaccord at more than C$1.1 billion ($800 million). Chief Executive Officer Dan Daviau told Bloomberg News last week that a higher offer is impossible because the buyout group is already planning to borrow C$825 million and can’t get more. The loan is being led by New York-based HPS Investment Partners.
“Even if we wanted to increase our bid, we don’t have the financial capacity to do so,” Daviau said.
(Updates with share price in sixth paragraph)
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