CI not giving up on Clarington

CI Financial has made a renewed higher bid for Clarington, just one week after the fund company’s board agreed to a friendly takeover by Industrial Alliance.

The bidding war for Clarington began October 31, when CI announced a $13 per share offer for Clarington. On November 7, Industrial Alliance countered with a $14.25 offer, which was unanimously accepted by Clarington’s board. However, late Monday, CI made a new bid: $14.75 per share, or approximately $285 million.

Clarington shareholders can elect to receive, at their option, $14.75 cash, common shares of CI valued at $14.75 or a combination of cash and CI common shares valued at $14.75 for each common share of Clarington. CI expects to send its offer to Clarington shareholders as soon as possible.

CI says its new bid takes into consideration a $7 million break fee the Clarington board of directors provided to Industrial Alliance in connection with its bid.

“CI was greatly disappointed that Clarington’s board of directors agreed to such a break fee without serious negotiations with any other party as it unfairly transfers shareholder value to Industrial Alliance and has created an impediment to potential higher bids,” CI said in a release.

CI also argues that its offer provides greater value to Clarington unitholders, since the firm plans to lower fees as Clarington funds are aligned with the lower cost structure of existing CI funds.

CI estimates the fee reductions will be worth $81 million to Clarington unitholders over the next seven years.

“These MER reductions are clearly a benefit to Clarington Fund unitholders that must be considered in the overall evaluation of our offer,” said CI president Stephen MacPhail in a statement. “Any other offer that does not match these clearly isn’t an equivalent offer and disregards the fiduciary obligation to the mutual fund unitholders.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com