Fiera buying YMG Capital Management

Two of Canada’s independent investment managers are coming together in a takeover which will make them among the largest of their kind in Canada.

Fiera Capital Management has reached an agreement to purchase YMG Capital Management for $3.25 per share, a premium of 22% over the recent volume-weighted average. Scotia Capital, serving as advisors to YMG, has endorsed the terms of the deal for shareholders. The resulting company will manage assets in excess of $26 billion.

“YMG is known for its core investment strategies and strong relationships between its portfolio managers and clients,” said Jean-Guy Desjardins, chairman and CEO of Fiera Capital. “We look forward to working with YMG personnel as we build one of Canada’s leading independent investment management firms.”

YMG announced it had entered exclusive discussions with a third party on November 14, and negotiations have been kept quiet since then. The board of directors of YMG has unanimously approved the deal and has agreed to recommend that YMG shareholders vote in favour of the transaction.

“The board and management have considered and explored a number of strategic alternatives,” said Eric Innes, president and CEO of YMG. “We’re confident that partnering with Fiera Capital and its exceptional investment professionals is in the best interests of all concerned. In particular, our clients will enjoy continuity of our investment teams, styles and process.”

Shareholders controlling over 53% of YMG’s outstanding common shares have already entered into support agreements with Fiera Capital under which they will irrevocably vote their shares in favour of the takeover. YMG has also agreed to pay to Fiera Capital a non-completion fee of up to $1.25 million in certain circumstances.

An information circular will be mailed out in December, containing details of the special meeting of YMG shareholders and the proposed plan of arrangement. The transaction is expected to be completed in January 2006, pending the usual court and regulatory approvals.

According to the firm’s website, Fiera managed $10.9 billion as of October 1, 2005, with a client base of institutional investors, mutual funds, religious congregations, foundations and private portfolios. Created in September 2003, the firm merged with Seneal Investment Counsel in October 2005.

YMG was founded in 1983 and managed $15.2 billion as of June 30, 2005, for a client base of financial institutions, pension plans, third party funds and foundations.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com