Close of businesswoman making announcement in paper trumpet

RF Capital Group Inc. dismissed a $367-million takeover offer from rival independent firm Canaccord Genuity Inc., saying the proposal isn’t in the best interests of the company’s advisors, clients or shareholders.

Canaccord Genuity sent a letter last week to RF Capital’s board offering $2.30 per share for the company.

The letter from Canaccord president and CEO Dan Daviau said combining the two companies would create “the preeminent independent wealth business in Canada” with more than $60 billion in assets under administration (AUA).

Daviau said Richardson Wealth’s advisors would benefit from his firm’s “scale, stability and growth potential.” Canaccord cited “numerous attempts” since September to discuss its proposal.

In a statement on Monday, RF Capital said its board “unanimously concluded” not to engage with Canaccord, noting that the takeover proposal wasn’t in the best interests of RF Capital’s shareholders, advisors and clients “in light of the considerable opportunities for Richardson Wealth in the fast-growing wealth management industry.”

GMP Capital Inc. consolidated ownership of Richardson GMP last fall. When the transaction closed, the firm was rebranded RF Capital Group and the brokerage was renamed Richardson Wealth. Shareholders approved the deal after GMP Capital agreed to a $40-million share buyback following pressure from a group of investors, including a former executive.

That transaction valued shares at $2.42 each, compared to Canaccord’s offer of $2.30. On Friday, RF Capital shares closed at $1.76 on the Toronto Stock Exchange.

Richardson Wealth reported AUA totalling $30.3 billion on Dec. 31, 6% more than a year earlier.

Canaccord reported Canadian AUA of $29.3 billion on Dec. 31. The firm’s global AUA, which includes its wealth management businesses in the U.K., Europe and Australia, totalled $85.2 billion.

In his letter, Daviau said 14 advisor teams from Richardson Wealth managing more than $3 billion in assets have moved to Canaccord in the past three years.

A combined firm would be well placed to serve successful entrepreneurs, private clients and other high net-worth investors, the Canaccord release said.

Canaccord said RF Capital’s board rejected the proposal “without reason,” and that representatives of Richardson Financial Group Ltd. (RFG), which holds a 44% stake in RF Capital, declined to discuss the offer.

In a statement Monday, RFG confirmed its shares aren’t for sale.

“Richardson Wealth has incredible long-term potential as an independent leader in the Canadian wealth management industry,” said RFG president and CEO Sandy Riley.

“We believe that RF Capital is embarked on a strategy that will generate far more shareholder value than a transaction with Canaccord would.”

Daviau said he wants to acquire 100% of RF Capital but would settle for more than 50% control if Richardson Financial Group is unwilling to sell its shares. While he said he would prefer an agreement that RF Capital’s board supports, “we are prepared to proceed unilaterally with an offer directly to your shareholders.”

On RF Capital’s March 5 quarterly conference call, president and CEO Kish Kapoor said that “after a difficult multi-year journey to transform the business, we have positioned the company for long-term success.”

The firm’s strategy, Kapoor said, would be centred around growing the existing client base, acquiring “like-minded firms” and attracting new advisors.

“We’ve been actively engaged in talking to people who are recruits or advisors at other firms who would now like to join us given that uncertainty is behind us,” Kapoor said. He added that he would be announcing details of the firm’s one- and five-year plans at the firm’s annual general meeting this spring.

Last month, the firm said Richardson Wealth president and CEO Andrew Marsh would leave his role at the end of March.