(January 39 – 8:50 ET) – Mackenzie Financial Corp. and Investors Group Inc. have announced a definitive agreement for the sale of Mackenzie.

Under the transaction, to be structured as a takeover bid by Investors Group, each Mackenzie share is valued at $30 per share based on a combination of cash and shares. The total value of the offer is $4.15 billion.

Mackenzie shareholders will be able to elect to receive $30 cash or 1.2 Investors Group common shares per Mackenzie share, or a combination thereof. The aggregate amount of cash available under the offer is $3.181 billion, or about 77%.

Mackenzie’s board and its special committee of independent directors have received opinions from CIBC World Markets and Merrill Lynch that the deal is fair to the Mackenzie shareholders.

The combined firms will be far and away the dominant mutual fund group in Canada with over $85 billion in assets under administration, about a 17% market share. Mackenzie’s investment and sales and marketing operations and its management will continue to operate as a separate entity with its own culture and approach to the market. The two companies will examine ways to reduce expenses for both unitholders and shareholders by achieving synergies in their back office operations.

“Due to the process we started in November, we first had to have a transaction which meets the needs of shareholders,” said Jim Hunter, president and CEO of Mackenzie Financial. “We have met our objectives for shareholders with this agreement. Both Power Financial Corp. and Investors Group have an outstanding record of delivering increases in shareholder value over the long term.”

“We were looking for a strategic partner that shares our vision of a full service, multiproduct financial institution distributed by independent financial advisors. The alliance will give us scale in insurance, banking, and brokerage services, further enhancing Mackenzie’s ability to innovate for the benefit of all financial advisors and their clients,” added Hunter.

“Mackenzie Financial gives us an excellent business position in a wide variety of distribution channels, including the important network of financial planners and investment dealers,” said Robert Gratton, president and CEO of Power Financial Corp. “Mackenzie’s asset base, quality of investment management, strong sales and marketing organization and its MRS organization make it a leader in the industry,” added Gratton.

“We see great potential to work together in areas that benefit both organizations, while retaining separate and distinct management of our respective distribution channels, investment management operations and brands,” said Sandy Riley, president and CEO of Investors Group.

Al Dilworth, chairman of the special committee of independent directors of Mackenzie’s board said the bidding process yielded several serious competing proposals for Mackenzie.

Mackenzie has agreed to provide support in completing the deal. The offer is conditional upon Mackenzie’s shareholder rights plan being waived or terminated prior to closing. Mackenzie has also agreed, among other things, not to solicit competing acquisition proposal. It has agreed to pay a break-up fee of $180 million in certain circumstances.

The offer will be mailed to Mackenzie shareholders by February 15. It is conditional upon at least two-thirds of the Mackenzie shares being tendered and not withdrawn and other customary conditions. Closing is targeted for April 2001.
-IE Staff