(November 6 – 16:00 ET) – Mackenzie Financial Corp. is rejecting the $3.9 billion takeover bid by C.I. Fund Management Inc., calling it “opportunistic” and insufficient.

Mackenzie says “C.I. did not advise or discuss the proposed offer with Mackenzie prior to the announcement”. Mackenzie notes that the offer values its shares at just $26.50 per share, since the bid was made mostly with C.I. stock. The firm says that C.I.’s cash contribution to the deal, limited at $600 million, is essentially coming from Mackenzie.

Mackenzie saw its cash position increase to $536 million from $293 million in the past year due to the sale of its investment in Merrill Lynch, combined with cash flow from operating activities. At its fiscal year end, C.I. had less than $10 million in cash, and another $57 million available under its credit line. C.I. spent $60 million in cash on BPI Financial Corp. last year and has used cash to buy back its own shares, too.

“This unsolicited proposal is opportunistic and does not reflect the interest of shareholders and amounts to using Mackenzie’s own cash to fund their proposed offer,” said James Hunter, president and CEO of Mackenzie. “The proposed C.I. offer undervalues considerably the value of the company’s shares and fails to recognize the longstanding value of Mackenzie’s business, as well as the number of new products and initiatives that reflect the company’s tradition of innovation in the Canadian mutual fund industry.”

In response to the bid Hunter says, “We are considering a wide range of options to determine how best to respond and will take all appropriate steps to ensure that shareholder value is maximized. We will be meeting with our board shortly to apprise them of these developments and the board will respond as appropriate in due course.”

Phil Cunningham, president of Mackenzie Financial Services, says “We believe the proposed offer is not a good deal for Mackenzie shareholders, and this will become more obvious with each passing day.”
-IE Staff