TWC set to announce merger deal, sources say

September 16, 2003) Saskatchewan-based mutual fund dealer TWC Financial is actively seeking a strategic partnership with another financial firm, industry sources say, and an agreement could be in place before the end of the month.

There’s been nothing official from TWC but insiders say the firm, with about $4 billion in assets and 400 advisors across the country, is close to a deal. “I think we’ll hear an announcement fairly soon,” one source told Advisor.ca.

At a recent meeting of company reps, TWC officials revealed that a tender process has produced five serious offers. Sources say TWC isn’t interested in working with a bank, leaving other fund dealers, fund companies and insurance firms as possible suitors.

It’s not clear just how much of the firm TWC is willing to give up. Rumoured frontrunners for a stake in TWC include Manulife, Berkshire and Assante.

Hints of a deal first surfaced on Advisor.ca’s Talvest Town Hall earlier this month.

“I know for a fact that an agreement between TWC and another company will be announced in the next week or two,” a participant in the online forum wrote. “They have narrowed their choice to a company that best fits with TWC’s independence philosophy. I understand it’s not a sale; it’s a merger to take advantage of each company’s strengths.”

“I’m a bit nervous but I believe that this will not go ahead unless it’s a good deal for TWC staff and reps,” another advisor, identifying himself as a TWC rep, wrote. “[TWC president and founder] Tim Calibaba lives in the same small town as his staff and he won’t sell them out.”

Kevin Cork, an advisor and TWC branch manager, says he also trusts Calibaba’s intentions. “I get the sense they are trying to maintain the flavour and the integrity of TWC,” Cork, president of the Absolute Group in Calgary, told Advisor.ca.

TWC, founded in 1986 and based in Radville, Saskatchewan, is known for its strong focus on independence. Calibaba did not respond to an e-mail request for comment on the merger rumours.

It’s been a busy year in terms of consolidation for the country’s fund dealers. A proposed merger between IPC Financial Network and Dundee Wealth Management collapsed earlier this year amid regulatory complications. Both firms have since been linked to other merger deals.

In May, the parent company of Cartier Partners announced the Montreal-based firm was up for sale. Last month, CI Fund Management revealed plans to purchase the Canadian operations of Assante for $846 million.

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One advisor in the Town Hall called the Assante/TWC partnership a “done deal.” But the CI purchase of Assante, as well as the fact that both Assante and TWC are based in Western Canada, raises questions about that pairing, considering that TWC has promised to try to protect the Radville office.

Cork believes Winnipeg-based Assante may not necessarily be the best fit for TWC. “One of the strengths of TWC is its independence, in the sense of not having in-house products,” he says. “That’s one of the big hesitations I would have with a firm like Assante. Whatever the actual situation is, they are tainted with that conflict-of-interest brush and that would make my job as an advisor that much harder. Even if I don’t use the in-house product, there will always be that hint of suspicion.”

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Join the discussion on the future of TWC in the “Free for All” forum of the Talvest Town Hall on Advisor.ca.

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

(09/16/03)

Doug Watt