By James Langton

(January 17 – 16:00 ET) – Bill Holland, chief executive of C.I. Fund Management Inc., closed the RBC Dominion Securities Conference on Wealth Management with a jovial recounting of his firm’s stint as the black knight in the ongoing takeover fight for Mackenzie Financial Corp.

Holland characterized the process as, “a lot of fun”, noting that he got a quick education in the business of arbitrageurs. He says he was amazed at the speed with which the arbs got control of the stock, saying he took tons of calls from Mackenzie shareholders, all claiming to be long-term shareholders, but all coming from New York City’s 212 area code.

He says that it was C.I.’s strategy to come in with its best bid, in a deal that would give Mackenzie shareholders a nice premium, but would still be accretive to his firm. He suggests that C.I. came very close to winning with its bid, noting that 24% of shareholders were prepared to tender to its offer.

That counts as close because, he argues that 40% of the shares were conflicted — namely the 30% controlled by AIC and the Caisse that are working on a rival bid, and 10% controlled by Mackenzie insiders.

“Our bid strategy was right,” he said, lamenting that with the poison pill in place and the Ontario Securities Commission refusing to quash it, C.I. decided to walk away from the bid at what is a busy time in the fund business.

Holland suggested that C.I. would have been willing to add cash, or change other parts of its bid, if only Mackenzie’s investment bankers had called and asked to negotiate. But, he says, C.I. never heard from them.

Holland said if the situation was reversed, he’d likely jump at the bid. “If I came in Monday morning like Mackenzie did and my stock is up 50% — there’s no such thing as hostile. It’s love. I’d thank them for making us 50% richer.”

As for C.I. getting back in the acquisition game, Holland says it’s certainly possible. He expects to see continued consolidation of the Canadian money management business, and continued interest from foreign buyers.

Holland gives 50/50 odds on C.I. doing another deal in the next 18 months, noting that it has talked to every Canadian fund company and insurer, and has been rebuffed by the big fund companies because they are generally not widely held they have to walk away.

C.I. made the bid for Mackenzie because it figured the large widely held company would soon be in play. And a widening relative valuation in their stocks meant that C.I. could do the deal as accretive to earnings.