The shares of venerable wealth management firm Gluskin Sheff + Associates Inc. are trading above the price being offered by private equity firm Onex Corp. in a proposed $445 million deal.
Following market close on March 22, the Toronto-based firms announced a definitive agreement that would see Onex acquire 100% of Gluskin Sheff for $14.25 per share. The proposed transaction, which requires shareholder, regulatory and court approval, is expected to close in the first half of 2019.
In the wake of the deal announcement, Gluskin Sheff’s share price jumped from around $11 per share, where it had been trading in recent days, to $14.45 per share. It has since continued to trade slightly above the proposed acquisition price, which represents a 28% premium on Gluskin Sheff’s closing price on March 22, and a 37% premium over its 60-day volume weighted average price.
Assuming that the deal goes ahead, Gluskin Sheff will continue to be led by its current management team, and it will also continue to operate under its existing name.
A shareholder meeting is slated for May 16 to approve the proposed deal. In the meantime, Gluskin Sheff retains the right to consider superior takeover bids, and Onex has the right to match any higher bids. The deal also includes a $13.3 million break fee.
Gluskin Sheff’s board is unanimously supporting the deal, and certain members of its senior management team have agreed to roll a “significant portion” of their Gluskin Sheff shares (representing approximately 7% of the Gluskin Sheff shares) into Onex subordinate voting shares as part of the deal agreement.
“This partnership will provide us with the resources to better serve all of our clients and expand our product offerings with alternative investment strategies,” said Jeff Moody, president and CEO of Gluskin Sheff, in a statement accompanying the deal announcement.
“By combining Gluskin Sheff’s public securities investing platforms with Onex’ private equity and private debt platforms the clients of both firms will have greater investment options,” added Gerry Schwartz, chairman and CEO of Onex.