Following former Cossette SVP Georges E. Morin’s immediate resignation over the weekend, the agency announced this morning that it received an unsolicited and non-binding proposal from privately held Cosmos Capital to acquire all of the co’s outstanding subordinate voting shares at a 52.3% premium over stock close on Friday. The Cossette board met today to discuss the bid.
The proposal by Cosmos Capital, which is controlled by former vice chair and president of Cossette François Duffar, prices the voting shares at $4.95 per, and includes the subordinate voting shares resulting from the conversion of all multiple voting shares (other than those held by members of the Cosmos Capital and their affiliates). The deal on the table for outstanding shares values the co. at over $78 million. Morin is also part of the group of investors in Cosmos Group, which includes the former head of BCE Inc, Jean Monty, now president of Libermont; Daniel Bernard, president of Provestis and chair of Kingfisher plc; and a multi-billion dollar private equity firm.
A statement from Cosmos says that a reorganization of Cossette resources and capital will lead to a more efficient operation, but Duffar says the HQ will remain in Quebec. ‘Our objective is three-fold,’ says Duffar. ‘The truly international character of our shareholder group with North American and European investors will allow us to strengthen Cossette’s positioning and presence in international markets. Secondly, we will welcome enthusiastically the continued participation of the existing senior management team, and indeed European and North American entrepreneurs who will join the leadership of the company. And lastly, we will build upon Cossette’s legacy as a highly client-centric organization in which creativity, efficiency and innovation are the hallmark of a more integrated offering of the company’s products and services.’
Cosmos has a lock-up agreement with Burgundy Asset Management for a block of shares representing 11.1% of the outstanding shares, and already owns 18.7% of the outstanding shares. Cossette’s multiple voting shares, as of today, are held by chairman and CEO Claude Lessard, president of media, research and interactive services Pierre Delagrave, Duffar (who left Cossette in May) and Morin (on Oct. 16, Morin’s 871,659 multiple voting shares will be converted into subordinate voting shares, on a one-for-one basis).
Since the number of multiple voting shares held by Lessard and Delagrave (the principal shareholders) won’t make up more than 30% of the aggregate number of multiple voting shares that were collectively held by them at the closing of the initial public offering (12,982,000 multiple voting shares), the Trust Agreement between the holders of multiple voting shares, CIBC Mellon Trust Company and Cossette provides for the automatic conversion of all outstanding multiple voting shares following the conversion of Morin’s multiple voting shares.
