TORONTO – Arbor Memorial Services Inc. (TSX: ABO.A, ABO.B) says it has signed a takeover deal with a company backed by a shareholder group that values the funeral services company at $375 million
The Toronto-based company said late Tuesday that an unnamed company has offered $32 per share for the shares it does not already own.
That represents a premium of 42 per cent to the closing price of its class A shares and a 48 per cent premium to the closing price of its class B shares Monday on the Toronto Stock Exchange
The purchasing company is sponsored by a group of existing shareholders, which collectively hold a majority of its stock.
Arbor’s board of directors is unanimously recommending that shareholders vote in favour of the deal
Their support comes after independent valuator TD Securities Inc., placed the fair market value of each share between $32 and $38
The purchaser group, which includes Scanfield Holdings Ltd., Fairfax Financial Holdings Ltd. (TSX:FFH) and JC Clark Ltd., currently holds 83.8 per cent of the class A shares and 76.1 per cent of the class B shares.
Under terms of the deal, each of the shareholders in the group except for Scanfield will sell a portion of their investment in Arbor on the same terms as its other shareholders. When the deal is closed they will retain an interest in Arbor that is expected to be sold to the new owners over time
“We believe this transaction represents an excellent opportunity for Arbor’s public shareholders to monetize their holdings for cash consideration and eliminates stock liquidity challenges related to the small market capitalization of Arbor” said David Scanlan, Chairman of Scanfield and Arbor
“The transaction allows for the continued commitment of the Scanlan family to the success of Arbor for the very long term. In the meantime, it will be business as usual at Arbor.”
Paul Rivett, vice-president of operations at Fairfax said the company supports the deal that takes Arbor private and a price that delivers fair value to shareholders.
“We intend to provide preferred share financing to make this liquidity event possible and look forward to continuing our relationship with Scanfield and Arbor as a private company for a number of years.
Shareholders will vote on the deal at a special meeting held on or before Nov. 30 and it is also subject to customary closing conditions.
The company also announced late Tuesday third-quarter net profits fell substantially from the year-earlier quarter to $1.3 million, or 13 cents per share, down from $2.3 million, or 22 cents per share, in the year ago.
Revenue improved, however, to $67 million from $66.1 during the 2011 quarter
Arbor Memorial Services Inc. owns 41 cemeteries, 27 crematoria, eight reception centres located on cemetery properties and 83 funeral homes in eight Canadian provinces.
Interesting deal with the generous premium offered compared to the closing stock price. Kind of strange that many other companies are running scared and these (inside) investors are heading deeper into the flames. Wonder if these shareholders have something up their sleeve like the start of another acquisition/consolidation spree since borrowing rates are so low right now. I wish them luck!