Industrial Alliance trumps CI bid for Clarington

Industrial Alliance Insurance and Financial Services is taking over Clarington in a friendly takeover valued at $273 million. Clarington’s board has approved the bid, which comes one week after CI’s offer of $254 million.

In a press release issued early Monday morning, Industrial Alliance said it had tendered a cash offer for Clarington, at a price of $14.25 per share. CI offered $13 per share. When CI first announced its unsolicited takeover attempt, Clarington’s shares were trading at $8.

Clarington’s board of directors unanimously approved the transaction and has recommended shareholders also accept the deal.

On Friday, Clarington hired Blair Franklin Capital Partners to evaluate the situation and recommended that Industrial Alliance’s bid was “fair from a financial point of view to the holders of Clarington common shares.”

“We are very pleased with this transaction, which is the natural extension of our wealth management growth strategy,” said Industrial Alliance president Yvon Charest. “Together, Industrial Alliance and Clarington will have the scale to compete as a strong player in the increasingly concentrated retail fund marketplace. With over $10 billion of retail funds under management, the combined investment management operations will have over 500,000 clients and the size to provide value to shareholders and unitholders alike.”

“This transaction follows the rapid and successful completion of our acquisition of BLC-Edmond de Rothschild Asset Management, which closed less than one year ago,” added David Scandiffio, President of Industrial Alliance Fund Management. “The addition of Clarington realizes our goal to be a national player in the fund business bringing this business segment more in-line with our well-recognized national presence in the life insurance business. We are very excited about working with the Clarington team.”

“In Industrial Alliance, Clarington has found an exceptional partner to continue the strong sales and asset growth that has long been a hallmark of our company,” said Clarington chair Terence Stone. “This offer represents excellent value for our shareholders, and presents them with the opportunity to participate in the future growth of a well-managed, strong-performing company that shares our vision and believes in the business model and principles on which Clarington was founded.”

Clarington shareholders will be offered $14.25 per share in cash or Industrial Alliance common shares. Details will be sent to shareholders later this month.

CI Financial has withdrawn its offer, noting that it’s not clear if Industrial Alliance’s bid includes the fee reductions that CI proposed — reductions that CI says would have represented tens of millions of dollars in savings for Clarington fund unitholders.

“I would expect that Clarington has got Industrial Alliance to match CI’s unitholder fee reductions as the Clarington unitholders should not be the ones funding the higher bid,” said CI president Stephen MacPhail.

The transaction is expected to close in January 2006.

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