Dundee’s deal for IPC collapses

(May 5, 2003) Dundee Wealth Management’s proposed acquisition of Investment Planning Counsel of Canada (IPC) Financial Network has been called off amid regulatory complications. In a joint statement released Friday, May 2, the two companies said they were terminating the transaction, estimated to be worth $150 million.

Dundee’s takeover of IPC was first announced last Christmas and was scheduled to close last month. But the companies failed to meet an April 25 deadline because of “unfulfilled closing conditions” relating to “irregular activities” involving former principals of KPLV Securities, which IPC acquired in 2001. The Quebec Securities Commission is now investigating those activities.

“We were working through the problem, but Dundee felt there wasn’t enough information and they weren’t comfortable closing, which is certainly understandable,” says IPC vice-chair Chris Reynolds.

For its part, IPC didn’t want to continue to delay closing, Reynolds told Advisor.ca. “A lot of things we wanted to implement were on hold pending this merger.”

“We decided jointly that it was best that we go our separate ways,” Reynolds adds. “We spent enough time and energy trying to make this happen, and if it wasn’t meant to be, it wasn’t meant to be.”

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Reynolds feels it’s unlikely the Dundee deal will be revisited, even after the regulatory problems are sorted out. And he stresses IPC won’t be looking for an alternate buyer. “We’ve spent too much time on this. We’d rather have a definite message to advisors that we’re going to continue with our business plan.”

Industry observers suggest IPC might be forced to consider the consolidation route. Pointing to the company’s “mounting debt load,” Dan Hallett, senior investment analyst at Sterling Mutuals, says he still believes IPC will strike some sort of deal. Hallett lists Berkshire and Assante as possible suitors.

“Beyond that, the list extends to some brokerages but many are watching budgets closely,” he adds. “And while a deal would likely be in the form of a share swap, there are real costs to integration so I think finding a suitable partner will be challenging.”

Since the announcement, Reynolds says he’s had dozens of calls and e-mails of support from IPC advisors. “They’re somewhat disappointed, but they’re behind the decision and are ready to move forward.”

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Read Reynolds’s thoughts on the changing face of the industry in “View From the Top” on page 18 of the May edition of Advisor’s Edge. Reynolds is joined by Tom Rice of Rice Capital Management Plus Inc., Marty Weinberg of Assante Corp. and Dan Richards of Cartier Partners Financial Group in this round-table discussion.

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Tell us your thoughts on this latest development in the IPC/Dundee deal. What will it mean to your industry? Is this good or bad for IPC’s advisors? Share your thoughts on this or any other industry-related topic in the “Free for All” forum of the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca

(05/05/03)

Doug Watt