With the 2015 Proxy Season close at hand, Glass, Lewis & Co., LLC (Glass Lewis) and Institutional Shareholder Services Inc. (ISS) recently released their updated Canadian proxy voting guidelines. Changes and clarifications have been made to their guidelines in such areas as advance notice policies and by-laws, shareholder rights plans and majority voting.… Continue Reading
This is the final article in our mini-tender trilogy. We have previously discussed mini-tender offers from the perspectives of the offeror, and the issuer and shareholders. This article considers how mini-tenders might be strategically used in proxy contests.
As shareholder activism rises, the activists’ toolkit keeps evolving. The strategic use of a mini-tender offer in a recent proxy contest suggests that such offers may increasingly be considered as a means of influencing the outcome of proxy contests.… Continue Reading
In our previous article, we introduced mini-tenders and discussed the factors that should be considered before launching a mini-tender offer. As a refresher, a mini-tender is an offer to purchase securities below the threshold that triggers regulatory rules for take-over bids. Such an offer is not specifically regulated and can be used to acquire small but not insignificant positions in public companies, often at a discount to the prevailing market price.
In this article, we discuss mini-tenders from the perspective of issuers and shareholders.
Mini-tenders have a bad reputation, which may explain why they are used infrequently. This is the first in a trilogy of articles about mini-tender offers from the perspectives of offerors, issuers and shareholders. It reviews factors that an offeror should consider before launching a mini-tender offer.
A mini-tender is simply an offer to purchase securities below the threshold that triggers regulatory rules for take-over bids. Such an offer is not specifically regulated and can be used to acquire small but not insignificant positions in public companies, often at a discount to the prevailing market price.
Over the summer, the British Columbia Securities Commission (BCSC) issued reasons for its previous decision that allowed Augusta Resource Corporation (Augusta) to maintain its shareholder rights plan after a hostile bid was made by HudBay Minerals Inc. (HudBay). The BCSC permitted Augusta’s rights plan to stay in place for an unusually long period of 155 days after HudBay initiated its bid.
HudBay had brought an application to the BCSC asking for the shareholder rights plan to be cease traded under the public interest power of the Securities Act. HudBay argued that the shareholder rights plan was no longer serving … Continue Reading
A duty to negotiate in good faith appears to run counter to the adversarial nature of bargaining. However, parties may have a duty to negotiate in good faith according to the recent decision in SCM Insurance Services Inc. v. Medisys Corporate Health LP, 2014 ONSC 2632, where the Ontario Superior Court held that the parties had intended to create “an enforceable obligation” to negotiate in good faith despite no express covenant to do so.
Summary of Facts
In 2011, Medisys sold its independent medical examinations (IME) business to the Plaintiffs and agreed to a five year non-compete and non-solicit … Continue Reading
As we described in a previous blog post, the Ontario Court released a decision in March (Champion Iron Mines Limited) in which it held that a fairness opinion that does not disclose the analysis underlying the opinion was inadmissible as evidence before the Court on an application to approve a plan of arrangement. The decision of Justice David M. Brown suggested that companies might need to bolster their disclosure of fairness opinions in order for an Ontario Court to take the opinion into account in a fairness hearing for a plan of arrangement.
In almost every Canadian M&A transaction, the board of directors of the target company, and often also the acquiring company, will expect their financial advisors to provide a fairness opinion to the effect that the price in the proposed transaction is fair to the company and its shareholders from a financial perspective. These opinions are not legally required, but they are commonly used by boards as evidence that … Continue Reading
There are important lessons in a recent Ontario Superior Court decision examining defensive tactics taken by a board in the context of a contested shareholders’ meeting.
In Concept Capital Management Ltd. v. Oremex Silver Inc., 2013 ONSC 7820, the board of Oremex — during a contested election — postponed a shareholders’ meeting and issued shares to a third party, GRIT, in a financing transaction that closed in escrow on the same date as the revised record date for the meeting. Oremex took the view that the new shares could be voted at the contested meeting.
With the recent election of seven nominees to the board of CP Rail, Bill Ackman and Pershing Square demonstrated in dramatic fashion that no Canadian company is immune from the rough-and-tumble world of proxy battles. Mason Capital also illustrated this recently with its successful opposition to the proposed share conversion of Telus Corp. Shareholder activism is clearly alive and well in Canada.
In light of the number of US activist investors that continue to look at target companies north of the border, and as part of the series of blogs for US investors that was recently launched by my colleagues … Continue Reading
Acquisitions of public companies in Canada almost always take the form of either a take-over bid or court-approved plan of arrangement. Choosing between the two is highly dependent on the facts of each case. It’s not uncommon for bidders to start with one structure and then to flip over to the other as the deal evolves. I’ve set out below the top ten considerations for a bidder when it makes this important decision:
- Hostile/Friendly. If the offer is not supported by the target’s board, the bidder will almost always choose to proceed by way of take-over bid. Although there
A common technique by dissidents seeking to replace a board of directors is to nominate a rival slate of directors from the floor at the company’s annual meeting. The dissident group might succeed because the target company has not had time to round up support from friendly shareholders who did not bother to vote.
The key to any good ambush, of course, is the element of surprise. This certainly holds true for an ambush by dissident shareholders.
If the target company catches wind of the dissidents’ plan in advance of the meeting, the target’s board might be able to adjourn … Continue Reading