(November 17 – 19:20 ET) – C.I. Fund Management Inc. is going ahead with its bid to create Canada’s largest fund company.

C.I. announced today that it has mailed its offer to acquire all of the outstanding common shares of Mackenzie Financial Corp. for $28.25 per common share, a $3.9 billion deal.

In the days leading up to today’s move, C.I. chief executive Bill Holland was reconsidering the bid in light of the news that Mackenzie had put in place one-year retention arrangements for all of its employees. Holland said that C.I. carefully considered whether to go ahead with the offer.

“While we are disappointed that Mackenzie has taken this step, and cannot determine its precise impact given the very general information provided by Mackenzie, we concluded today that the underlying rationale for the offer remains intact as we believe that a combination of Mackenzie and C.I. will be a great deal for shareholders and unitholders of both companies,” said Holland.

C.I. is offering $28.25 a share for Mackenzie in a mix of cash and C.I. shares. Only $600 million in cash will be available under the bid.

Mackenzie alleges that this amounts to using its own cash to complete the deal, as it has more than $500 million in cash on hand, and at its year end, C.I.. only had about $10 million. Mackenzie has hired CIBC World Markets and Merrill Lynch to find alternative bidders, and has adopted a poison pill designed to give it 60 days to consider offers.

The C.I. offer will be open for 35 days, until midnight December 22. “The 35-day period is two weeks longer than the period required by law, and gives shareholders of Mackenzie more than enough time to consider the offer,” Holland said.

“We are optimistic that all of the approvals necessary to complete the offer will be completed by that time and that Mackenzie’s board of directors will agree that Mackenzie’s recently announced shareholder rights plan will have served its purpose by that time and will be terminated,” Holland added.

If the deal goes ahead, the combination of C.I. and Mackenzie will form Canada’s largest mutual fund company with approximately $68 billion in assets, including $58 billion in mutual fund assets.
– IE Staff