Author: TSX Stocks

The Toronto-listed banking group, operating in Canada and the US and also a significant acquirer of wealth management businesses, is going private. A Middle East-based sovereign wealth fund is acquiring the lender. This story also underscores a trend of wealth-related firms moving off public markets, or choosing to avoid IPOs.

Canada-listed CI
Financial is being taken private in a C$4.7 billion ($3.36
billion) deal with Abu Dhabi-based Mubadala Capital giving the
group a C$12.1 billion enterprise value. 

Once the transaction is complete, CI will continue to operate
with its current structure and management team and will be
independent of Mubadala Capital’s other portfolio businesses, CI
said in a statement yesterday. (Mubadala Capital is the asset
management arm of Abu Dhabi’s sovereign wealth fund.)

Mubadala Capital has bought CI’s issued and outstanding shares in
cash for C$32 per share, a 33 per cent premium to the closing
price prior to the announcement of the deal, and a 58 premium to
the 60-day volume-weighted average trading price on the Toronto
Stock Exchange.

(US correspondent Charles Paikert notes: It appears Mubadala
is following the playbook of Clayton, Dubilier & Rice, the
private equity house that took Focus Financial private last
summer, taking it off public markets. Dan Glaser, operating
partner at the PE firm,
explained his reasoning for that deal to attendees at last
week’s IMPACT conference in San Francisco. A trend
seems to be in place of investors in wealth management
avoiding public markets. In addition to Focus getting out, St
Petersburg-headquartered Dynasty decided not to attempt an IPO
this year.)

CI Financial has made its name in the North American wealth
sector as a large buyer of RIAs in recent years, although it
subsequently sold a minority stake in its US business (see
article
here). In the US, the organization operates as Corient, a
brand it adopted in August 2023. This business will operate
independently under that brand. Since CI Financial entered
the US RIA sector in 2020, it has become one of the industry’s
fastest-growing wealth platforms through acquisitions and organic
growth. The Canadian interloper stunned the American RIA
business in 2020 and 2021, gobbling up over two dozen high
quality advisory firms with more than $175 billion in assets
under management.

CI’s board of directors, with interested directors abstaining,
unanimously recommended the transaction. The recommendation
followed the unanimous recommendation of a “special committee” of
the board.

“This transaction, with its significant cash premium, represents
an exceptional outcome for CI shareholders and provides certainty
to shareholders while CI pursues its ongoing transformation,”
William E Butt, CI’s lead director and chair of the special
committee, said. “It also provides significant benefits to
Canada, by providing long-term capital to underpin the building
of a Canadian champion in the wealth and asset management
industries.”

“Mubadala Capital invests with a long-term outlook and represents
long-term capital – providing stability and certainty for CI’s
clients and employees,” Kurt MacAlpine, CI’s CEO, said. 

Oscar Fahlgren, chief investment officer of Mubadala Capital,
said: “We look forward to partnering with CI’s talented team to
capitalize on new opportunities in the asset and wealth
management sectors and build on the company’s
successes.” 

Canada
CI will remain headquartered in Canada and existing operations
and structure in Canada will stay in place. This includes
maintaining CI’s existing technology and data protection
practices, including maintaining all personal data in Canada for
Canadian operations, it said. 

The transaction is also subject to court approval, regulatory
clearances and other customary closing conditions. The
transaction is not subject to any financing condition and,
assuming the timely receipt of all required regulatory approvals,
is expected to close in the second quarter of 2025.

MacAlpine expects to roll all his equity in the transaction and
other members of CI’s senior management holding an aggregate of
up to 1.5 per cent of CI’s shares, which are also expected
to have the chance to enter into equity rollover agreements to
exchange their CI shares into a new holding vehicle. In addition,
chairman William Holland may roll 25 per cent of his total CI
holdings in the transaction. All rollovers will occur at a value
equal to the cash purchase price, CI said. 

Each of CI’s directors and executive officers or entities
controlled by them, which own or control an aggregate of
approximately 16.88 per cent of CI’s outstanding shares, have
entered into a voting and support agreement with Mubadala Capital
agreeing to vote their shares in favor of the
transaction. 

INFOR Financial, which is acting as exclusive financial advisor
to the special committee, was paid a fixed fee for its services
and is not entitled to any fee that is contingent on the
successful completion of the transaction. Wildeboer Dellelce LLP
is serving as legal advisor to the special committee. Stikeman
Elliott LLP and Skadden, Arps, Slate, Meagher & Flom LLP serve as
legal advisors to CI. RBC Capital Markets is also an advisor to
CI.

Jefferies Securities acts as lead financial advisor to Mubadala
Capital and Blake, Cassels & Graydon LLP and Latham & Watkins LLP
serve as legal advisors to Mubadala Capital. FGS Longview acts as
strategic communications and public affairs advisor to Mubadala
Capital. BMO Capital Markets is also an advisor to Mubadala
Capital, the statement added.

As reported
here, reported adjusted net income at CI Financial was
C$141.2 million ($100.6 million) for the third quarter of 2024,
up from C$132.8 million a year earlier. Total client assets,
including its Canadian and US wealth management businesses, stood
at $518 billion at September 30, up from C$420.9 billion a year
before.

At the close in Toronto, the S&P/TSX Composite lost 0.13%.

The best performers of the session on the S&P/TSX Composite were CI Financial Corp (TSX:CIX), which rose 30.03% or 7.21 points to trade at 31.22 at the close. Meanwhile, BlackBerry Ltd (TSX:BB) added 10.33% or 0.34 points to end at 3.63 and Interfor Corp (TSX:IFP) was up 9.86% or 1.89 points to 21.06 in late trade.

The worst performers of the session were Torex Gold Resources Inc (TSX:TXG), which fell 8.14% or 2.53 points to trade at 28.54 at the close. IAMGold Corporation (TSX:IMG) declined 6.38% or 0.51 points to end at 7.48 and New Gold Inc (TSX:NGD) was down 6.30% or 0.25 points to 3.72.

Rising stocks outnumbered declining ones on the Toronto Stock Exchange by 561 to 392 and 85 ended unchanged.

Shares in CI Financial Corp (TSX:CIX) rose to 5-year highs; rising 30.03% or 7.21 to 31.22.

The S&P/TSX 60 VIX, which measures the implied volatility of S&P/TSX Composite options, was up 1.12% to 10.84.

Gold Futures for February delivery was down 3.11% or 85.20 to $2,652.00 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in January fell 3.03% or 2.16 to hit $69.08 a barrel, while the February Brent oil contract fell 2.72% or 2.03 to trade at $72.60 a barrel.

CAD/USD was unchanged 0.21% to 0.72, while CAD/EUR unchanged 0.34% to 0.68.

The US Dollar Index Futures was down 0.61% at 106.86.

(Bloomberg) — Canadian mutual fund manager CI Financial Corp. plans to go private in a C$4.7 billion ($3.4 billion) deal backed by Mubadala Capital, one of the largest-ever privatizations by an Abu Dhabi entity in the financial sector.

Shareholders of Toronto-based CI will be offered C$32 a share in cash, a 33% premium to last week’s closing price. The company will stay headquartered in Canada, and insiders will roll some of their shares into the private company, according to a statement Monday.  

Related: CI Financial Expects to Pay Off What Is Still Owed on U.S. M&A Deals January 2025

CI shares surged 30% to C$31.25 as of 9:52 a.m. in Toronto.

Mubadala Capital is an alternative asset manager owned by Mubadala Investment Co., one of several Abu Dhabi-based sovereign wealth funds, which oversee more than $1.5 trillion in assets and have splashed out billions of dollars to extend their influence on the global stage.

Related: Moody’s Downgrades CI Financial’s Debt Ratings

Mubadala closed the purchase of Fortress Investment Group earlier this year in a deal that was scrutinized by US officials, Bloomberg News has reported. The CI deal is large enough that it needs approval from the government of Canada, which has sought to beef up its reviews of investments by foreign state-owned businesses.  

Despite their vast financial resources, Abu Dhabi-based investors have sometimes struggled to hammer out cross-border deals. Early considerations to buy Standard Chartered Plc and Lazard Ltd. at the start of last year, for instance, proved ultimately unsuccessful.

CI had C$518 billion in client assets as of Sept. 30 and is one of Canada’s largest sellers of retail mutual funds not owned by a large bank or insurance company. Chief Executive Officer Kurt MacAlpine will continue to lead the firm. 

“Mubadala Capital invests with a long-term outlook and represents long-term capital – providing stability and certainty for CIʼs clients and employees,” he said in the statement. 

Just under half of CI’s client assets are managed by its US wealth management division, Corient. That division consists of a large network of registered investment advisory firms the Canadian company accumulated in an acquisition spree over the last several years. 

CI brought on 30 RIAs between late 2019 and 2022. CI nearly tripled its debt over that period to C$4.1 billion, causing S&P Global Ratings to cut the firm to junk in May 2023. 

CI then sold a 20% stake in Corient to a group of investors including Bain Capital LP and Abu Dhabi Investment Authority. The proceeds, $1 billion, were used to repay bonds and loans, allowing CI to reduce its leverage. But the deal also received some criticism from analysts for its structure, which included convertible preferred stock that gave the outside investors a guaranteed return. 

During the third quarter, Corient completed the purchase of two more RIAs with combined assets of C$8.1 billion. CI previously talked about taking Corient public, and MacAlpine told analysts earlier this month that it could revive those plans in 2026.

Including debt, the Mubadala Capital deal implies a total value for CI of C$12.1 billion. CI Financial will be delisted from the Toronto Stock Exchange following closing of the transaction, but the company will remain a reporting issuer in Canada because of its debentures and notes outstanding. 

The deal was approved unanimously by independent CI directors on a board committee. The company’s previously announced dividends will be paid, but future dividends will be suspended.

NEW YORK, NY / ACCESSWIRE / November 25, 2024 / Acreage Holdings, Inc. (“Acreage” or the “Company”) (CSE:ACRG.A.U, ACRG.B.U)(OTCQX:ACRHF, ACRDF), a vertically integrated, multi-state operator of cannabis cultivation and retailing facilities in the U.S., is pleased to announce that, further to its press releases of June 4 and June 5, 2024, Acreage anticipates that Canopy USA, LLC (“Canopy USA”) will complete its acquisition of Acreage pursuant to the Acquisitions (as defined below) in mid-December, 2024.

As further described below, as a result of the dilution in respect of the Offering (as defined below) completed by the Company in June 2024, the Company expects that the Exchange Ratio (as defined below) relating to the Fixed Shares (as defined below) will be significantly reduced. The reduction of the Exchange Ratio will result in fewer common shares (the “Canopy Shares”) of Canopy Growth Corporation (“Canopy”) (TSX:WEED, NASDAQ:CGC) issuable to each holder of Class E subordinate voting shares of the Company (the “Fixed Shares”) (CSE: ACRG.A.U, OTCQX: ACRHF). As a result of the material impact of the Offering it is anticipated that the current holders of Fixed Shares will receive zero value upon closing of the Acquisitions. The Company expects that the Floating Share Exchange Ratio (as defined below) will remain as provided in the Floating Share Arrangement Agreement (as defined below).

Acreage is party to an arrangement agreement with Canopy ‎dated April 18, 2019, as amended (the “Fixed Share Arrangement ‎Agreement”)‎, relating to the proposed acquisition (the “Fixed Share ‎Acquisition”) of all issued and outstanding Fixed Shares pursuant to the plan of ‎arrangement under the Business Corporations Act (British Columbia) (the “Fixed Share ‎Arrangement”). The Fixed Share Acquisition is anticipated to occur immediately after the acquisition ‎of the Class D subordinate voting shares of Acreage (the “Floating Shares”) pursuant to the plan of ‎arrangement under the Business Corporations Act (British Columbia) (the “Floating Share ‎Arrangement”) in accordance with the arrangement agreement (the “Floating Share Arrangement ‎Agreement”) dated October 24, 2022, as amended, among the Company, Canopy and Canopy ‎USA (the “Floating Share Acquisition” and together with the Fixed Share Acquisition, the ‎‎”Acquisitions”). Upon the closing of the Acquisitions, Canopy USA will own 100% of the issued ‎and outstanding shares of Acreage.‎ Closing of the Acquisitions is expected to occur in mid-December, 2024, subject to the satisfaction or waiver of closing conditions, including, but not limited to, receipt by Acreage, Canopy and Canopy USA of required regulatory approvals.

A letter of transmittal with respect to each of the Acquisitions will be mailed to registered shareholders of Fixed Shares and Floating Shares. All registered shareholders with physical certificate(s) will be required to send their certificate(s) representing their Fixed Shares and/or Floating Shares with a completed letter of transmittal to the Company’s transfer agent, Odyssey Trust Company (“Odyssey”), in accordance with the instructions provided in the applicable letter of transmittal. Additional copies of the letters of transmittal can be obtained through Odyssey. Shareholders who hold their Fixed Shares and/or Floating Shares through a broker or other intermediary and do not have Acreage shares registered in their name will not need to complete the applicable letter(s) of transmittal. Such shareholders should contact their broker or other intermediary to arrange for the deposit of their DRS statement(s) or certificate(s) representing their Acreage shares.

As previously disclosed, on June 6, 2024, Acreage completed its brokered private placement (the “Offering”) of 12,000 units (the “Units”) of the Company at a price of US$833.33 per Unit, with each Unit consisting of: (i) US$1,000 principal amount of non-recourse unsecured convertible ‎notes (the “Notes”), reflecting a 16.67% original issue discount‎, convertible into Fixed Shares; ‎and (ii) Fixed Share purchase warrants (the “Warrants”) of the Company. The “Conversion Price” of the Notes is the price per Fixed Share determined by multiplying (i) the “Exchange Ratio” (as such term is defined in Fixed Share Arrangement Agreement) as the same shall be adjusted in accordance with the terms of the Fixed Share Arrangement Agreement by, (ii) the Fair Market Value (as such term is defined in the ‎Fixed Share Arrangement Agreement) of the Canopy Shares on the business day prior to the closing ‎of ‎the Fixed Share Acquisition after giving effect to the conversion of the Notes and the determination of the ‎number of Warrants issued under the Offering. The Conversion Price will be determined immediately preceding closing of the Fixed Share Acquisition.

As noted in the Company’s press release dated June 5, 2024, the completion of the Offering resulted in significant dilution of the Fixed Shares, particularly given that the Conversion Price of the Notes is based on the Exchange Ratio, which will be adjusted pursuant to the Fixed Share Arrangement Agreement for issuances in excess of the Purchaser Approved Share Threshold (as such term is defined in the ‎Fixed Share Arrangement Agreement). The Offering is expected to result in the issuance of Fixed Shares under the Notes, and Warrants exercisable to acquire Fixed Shares, at the time of closing the Fixed Share Arrangement, well in excess of the Purchaser Approved Share Threshold, with the effect that the Exchange Ratio will be significantly reduced.

Based on the prevailing trading price of the Canopy Shares, the Exchange Ratio reduction is expected to have a material and adverse effect on the number of Canopy Shares that holders of Fixed Shares are expected to receive pursuant to the Fixed Share Arrangement and on the value of the Fixed Shares. The following table below sets forth the potential Exchange Ratio based on a range of Canopy Share prices:

All registered holders of Fixed Shares who submit a duly completed letter of transmittal along with their share certificate(s) to Odyssey will be entitled to receive a fraction of a Canopy Share in exchange for each Fixed Share held by such holder of Fixed Shares based on the Exchange Ratio then in place. As of close of business on November 22, 2024, the Canopy Share price on the Nasdaq was US$3.90. Accordingly, if the Canopy Share Price does not go above US$5.00, holders of Fixed Shares will not receive any Canopy Shares in exchange for their Fixed Shares.

All holders of Floating Shares who submit a duly completed letter of transmittal along with their share certificate(s) to Odyssey will receive 0.045 of a Canopy Share in exchange for each Floating Share held by such holder of Floating Shares (the “Floating Share Exchange Ratio”).

Where the aggregate number of Canopy Shares to be issued to a holder of Fixed Shares or Floating Shares would result in a fraction of a Canopy Share being issuable, the number of Canopy Shares to be received by such holder of Fixed Shares or Floating Shares shall be rounded down to the nearest whole Canopy Share and no compensation shall be issued in lieu of the issuance of a fractional Canopy Share.

Copies of the Floating Share Arrangement Agreement and the Fixed Share Arrangement Agreement may be accessed under Acreage’s profile on SEDAR+ at www.sedarplus.ca and with the U.S. Securities and Exchange Commission through EDGAR at www.sec.gov/edgar.

About Acreage

Acreage is a multi-state operator of cannabis ‎cultivation and retailing facilities in the U.S., including the Company’s national retail store ‎brand, The Botanist. With its principal address in New York City, Acreage’s wide range of national and regionally available cannabis products include the award-winning brands The Botanist and Superflux, the Prime medical brand in Pennsylvania, and others. Acreage has focused on building and scaling operations to create a seamless, consumer-focused, branded experience. Learn more at www.acreageholdings.com and follow us on Twitter, LinkedIn, Instagram, and Facebook.

Forward-Looking Statements

This news release and each of the documents referred to herein contains “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities legislation, ‎respectively. All statements, other than statements of historical fact, included herein are forward-looking ‎information, including, without limitation, the anticipated closing date of the Acquisitions, the Conversion Price or the Exercise Price, the number of Fixed Shares to be issued upon conversion of the Notes, the number of Warrants or Fixed Shares issuable upon exercise thereof, the conversion of the Notes and Warrants based on the timing of the completion of the Acquisitions, the dilutive effect of the Offering on the Fixed Shares, the price of the Canopy Shares, the number of Canopy Shares to be issued to the holders of Fixed Shares, adjustments to the Exchange Ratio in accordance with the terms of the Fixed Share Arrangement Agreement, the resulting Exchange Ratio reduction and the expected impacts of such reduction to the holders of Fixed Shares, the ability of the Company to remain solvent, the satisfaction of the conditions set forth in the Fixed Share Arrangement Agreement and Floating Share Arrangement Agreement, and the closing, and anticipated closing date, of the Acquisitions. ‎Often, but not always, forward-looking statements and information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, ‎or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. ‎Forward-looking statements or information involve known and unknown risks, uncertainties, and other ‎factors which may cause the actual results, performance or achievements of Acreage or its ‎subsidiaries to be materially different from any future results, performance or achievements expressed or ‎implied by the forward-looking statements or information contained in this news release.

Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including, but not limited to: the occurrence of changes in U.S. federal laws regarding the cultivation, distribution or possession of marijuana; the ability of the parties to satisfy or waive, in a timely manner, the conditions to the completion of the Fixed Share Arrangement Agreement and the Floating Share ‎Arrangement Agreement; the ability of Canopy, Canopy USA and Acreage to satisfy or waive, in a timely manner, the closing conditions to the Acquisitions; risks relating to the value and liquidity of the Fixed Shares, Floating Shares and the common shares of Canopy; Canopy maintaining compliance with the Nasdaq and Toronto Stock Exchange listing requirements; the rights of the holders of Floating ‎Shares and Fixed Shares may differ materially from those of shareholders in Canopy; expectations regarding future investment, growth and ‎expansion of Acreage’s operations; the possibility of adverse U.S. or Canadian tax consequences upon completion of the Acquisitions; the risk of a change of ‎control of either Canopy or Canopy USA; restrictions on Acreage’s ability to pursue certain business ‎opportunities and other restrictions on Acreage’s business; the impact of material non-recurring expenses in ‎connection with the Floating Share Arrangement on Acreage’s future results of operations, cash flows and ‎financial condition; the possibility of securities class action or derivatives lawsuits; risk of situations in which the interests of Canopy USA and the interests of ‎Acreage or shareholders of Canopy may differ;‎ Acreage’s compliance with Acreage’s business plan for the fiscal years ending December 31, 2020 through December 31, 2029 pursuant to the Fixed Share Arrangement Agreement; in the event that the Floating Share Arrangement is ‎completed, the likelihood of Canopy USA completing the Fixed Share Acquisition; there is no certainty on the Exchange Ratio and, depending on timing of closing of the Acquisitions, if at all, and the potential for dilution in respect of the Offering, there may be further diminution of the Exchange Ratio, which will result in fewer or no Canopy Shares being received upon completion of the Fixed Share Acquisition (see “Risk Factors – Risks Related to the Acquisition – Risks Associated with a Fixed Exchange Ratio” and “Risk Factors – Risks Related to the Acquisition – The Exchange Ratio may be decreased in certain instances” in the Company’s Management Information Circular dated May 17, 2019); risks relating to certain directors and executive officers of Acreage having interests in the transactions ‎contemplated by the Acquisitions and the connected transactions that are different ‎from those of the holders of Floating Shares or Fixed Shares; other expectations and assumptions concerning the transactions ‎contemplated between Canopy, Canopy USA and Acreage; the available funds of Acreage and the anticipated ‎use of such funds; the availability of financing opportunities for Acreage and Canopy USA and the risks ‎associated with the completion thereof; regulatory and licensing risks; the ability of Canopy, Canopy USA and ‎Acreage to leverage each other’s respective capabilities and resources; changes in general economic, business ‎and political conditions, including changes in the financial and stock markets; risks relating to infectious diseases; legal and regulatory risks inherent in the cannabis industry, including the ‎global regulatory landscape and enforcement related to cannabis, political risks and risks relating to regulatory ‎change; risks relating to anti-money laundering laws; compliance with extensive government regulation and the ‎interpretation of various laws regulations and policies; public opinion and perception of the cannabis industry‎; and such other risks disclosed in the Company’s Management Information Circular dated May 17, 2019, the Company’s Management Information Circular dated February 14, 2023, the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, dated April 1, 2024, and the Company’s other public filings, in each case filed with the SEC on the EDGAR website at www.sec.gov and with Canadian securities regulators and available under Acreage’s profile on SEDAR+ at www.sedarplus.ca. Although Acreage has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended.

Although Acreage believes that the assumptions and factors used in preparing the forward-looking information or forward-looking statements in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information and forward-looking statements included in this news release are made as of the date of this news release and Acreage does not undertake any obligation to publicly update such forward-looking information or forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws.

Neither the Canadian Securities Exchange nor its Regulation Service Provider, nor any securities regulatory authority in Canada, the United States, or any other jurisdiction, has reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.‎

Contact Information

For more information, please contact:

Philip Himmelstein

Interim Chief Financial Officer

Investors@acreageholdings.com

646-600-9181

SOURCE: Acreage Holdings

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