The board of directors of C.A. Bancorp Inc. urged its shareholders on Tuesday to reject the hostile take-over bid by Maxam Acquisition Corp. announced earlier this month.

The board’s unanimous recommendation is contained in a Directors’ Circular filed with the Canadian securities regulatory authorities and being mailed to shareholders.

On Dec. 3, Maxam Opportunities Fund LP and an affiliated fund company announced that they were making an all-cash offer for C.A. Bancorp at $1.22 per share, valuing the Toronto-based merchant bank and alternative asset manager at $32.6 million.

In making its recommendation, C.A. Bancorp’s board considered many factors, including the recommendation of its special committee and a written opinion from C.A. Bancorp’s financial advisor, CIBC World Markets Inc. According to CIBC, the consideration offered under Maxam’s offer is financially inadequate to the company’s shareholders.

“Our Board believes that Maxam’s offer is financially inadequate, opportunistic, and fails to recognize the full value of C.A. Bancorp’s assets and future value-creation potential,” said Timothy Unwin, chairman of the special committee. “The board fails to see how the Maxam offer serves the best interests of C.A. Bancorp shareholders and strongly urges its shareholders not to tender.”

“The Maxam offer is at a discount to current trading prices and represents a 49.9% discount to C.A. Bancorp’s net asset value,” continued Unwin. “In fact, Maxam has itself been buying C.A. Bancorp’s shares at a price higher than its deficient offer.”

In announcing the offer, Maxam said it provides shareholders with “compelling value” considering the lack of trading volume for the stock and “the lack of growth prospects for C.A. Bancorp’s business.”

But C.A. Bancorp’s board said it believes that Maxam’s $1.22 per share offer fails to provide full value for C.A. Bancorp’s assets and shares, and is an attempt by Maxam to acquire the firm without offering adequate consideration to shareholders.

The board said it has been working to evaluate a range of strategic alternatives to enhance shareholder value. While it is difficult to predict whether any transactions will emerge from these efforts and discussions, the board said it believes that C.A. Bancorp and its assets are potentially very attractive to other parties in addition to Maxam.

The board urged shareholders not to tender to the Maxam offer before the board and its advisors have had an opportunity to fully explore all available alternatives to the Maxam offer, including the status quo.

“We are committed to enhancing value for our shareholders and will aim to do so through the continued execution of our strategy and the active consideration of potential alternatives,” said Unwin.

IE