Canaccord Shares Crash As Investigation Casts Doubts Over Buyout Plans
Canaccord Genuity Group (TSE: CF) cautioned that an “ongoing regulatory matter” at one of its international companies may prevent it from obtaining fast approval for a management buyout.
A group of Canaccord senior executives has offered to take the banking firm private for $11.25 per share, but regulators’ approval will not be granted quickly, the company said Monday in a statement.
That implies the takeover is unlikely to be completed by the current deadline of June 13, and there is no certainty it will be completed before financial obligations expire on August 9, according to the firm.
“The underlying regulatory matter, which arose in the company’s capital-markets business and has been ongoing in the ordinary course, is unrelated to the management offer,” the Canadian firm said.
Following the news, Canaccord shares cratered nearly 14%, erasing most of the gains it sustained early in January 2023 when the buyout deal was first announced.
So far, the management offer, led by CEO Dan Daviau and Chairman David Kassie, has been everything but seamless. A special committee of directors refused to support it, citing a Royal Bank of Canada analysis that valued the business higher. Under pressure from a major shareholder, those directors eventually resigned, and a new special committee of the board was formed.
The management bid, which values Canaccord at more than $1.1 billion (US$825 million), is still being evaluated by that committee. It will also explore asset sales after the management buyout group agreed to drop a bid condition that barred the sale of any significant portion of the company.
Concerns about regulatory approval also caused Toronto-Dominion Bank Group to abandon its $13.4 billion merger of First Horizon Corp last week.
Information for this briefing was found via Sedar, Bloomberg, Reuters, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
