Apollo Wins Over Canadian Casino Holders With 15% Higher Bid
Tuesday 22nd December 2020
Private equity firm offers C$45 a share, up from C$39 a share Holders of 50% of shares have agreed to support the deal
Apollo Global Management Inc. increased its offer for casino operator Great Canadian Gaming Corp. by 15%, winning over a group of shareholders that had threatened to block the deal.
The private equity firm's new offer is C$45 a share, roughly where Great Canadian was trading in mid-February before the pandemic hit, up from a C$39 bid that a group of investors said undervalued the company. The equity value of the new proposal is slightly more than C$2.5 billion ($2 billion) based on a total of 56 million shares outstanding.
Apollo's new bid makes it likely that it will secure enough votes to acquire Great Canadian, which operates 26 gaming, entertainment and hospitality facilities across Canada. The raised offer has committed support from investors holding about 50% of the shares, including BloombergSen Inc., CI Global Asset Management and Burgundy Asset Management Ltd., Great Canadian said Monday in a statement.
Great Canadian shares rose 17% to C$43.60 at 9:44 a.m. in Toronto. The shares earlier touched C$43.80, the highest price since March 4.
All three firms had previously said they'd vote against the deal at a shareholder meeting scheduled for Wednesday. The transaction, which also has the support of Great Canadian's board, needs two-thirds approval.
BloombergSen is a Toronto-based hedge fund and isn't affiliated with Bloomberg LP, the parent company of Bloomberg News.
"The increased purchase price of C$45 per share unlocks greater value for shareholders, and the company and board appreciate the support of some of Great Canadian's largest institutional shareholders for this transaction," Peter Meredith, the Richmond, British Columbia-based casino company's chairman, said in a statement.
The breakthrough represents a significant reversal in a buyout attempt that appeared to be headed toward defeat this week. In addition to the holdout shareholders, proxy advisory firms Glass Lewis & Co. and Institutional Shareholder Services had recommended investors vote against the deal.
Apollo's bid met resistance the day after it was announced, with BloombergSen co-founder Sanjay Sen criticizing the offer's "rock bottom" price and saying Great Canadian didn't need a sale because it was still making money.
The strong opposition from institutional shareholders forced Apollo to weigh its options. The private equity firm began working on a higher offer but also considered scenarios where it would walk away from the deal, people familiar with the matter told Bloomberg earlier this month.