By James Langton

(November 27 – 14:30 ET) – Mackenzie Financial Corp. today mailed its directors’ circular urging shareholders to reject the unsolicited take-over bid by C.I. Fund Management Inc.

Mackenzie’s board of directors unanimously recommends that shareholders not tender their common shares.

“Under close and careful scrutiny, the C.I. offer is a poor one for our shareholders,” said Jim Hunter, president and CEO of Mackenzie Financial Corp. “Our financial advisors have each concluded it is an inadequate bid from a financial point of view. The value of their offer continues to decline in the marketplace. Their offer should be rejected — that is the strong recommendation of our board to shareholders,” added Hunter.

In a conference call, Hunter reiterated that the board’s reasons for rejecting the C.I. bid. He said the offer does not offer a fair multiple, is largely a paper bid, does not give Mackenzie shareholders a fair share of the combined company, and doesn’t reflect the value of Mackenzie’s new initiatives.

He characterized the bid as highly misleading and reasserted Mackenzie’s position that C.I. is just using Mackenzie’s own cash to swing the deal.

Hunter said although Mackenzie would contribute 55.9% of assets under management, 63.1% of revenue, 58.6% of EBITDA (earnings before interest, taxes, depreciation and amortization), 54.1% of cash flow and 61.2% of cash earnings, Mackenzie shareholders would only own 50.4% of the combined company.

Hunter said the decision to reject the bid came after an exhaustive look at the bid and C.I.’s financials, and Mackenzie’s board believes it can get a better deal for shareholders. On that basis, Mackenzie will go ahead with some sort of deal even if the C.I. bid is rejected by shareholders, because it has come to realize there are opportunities to enhance shareholder value.

Competing bids are obviously one alternative. While Hunter refused to go into specifics about competing offers, he did indicate that it was now pointless to hold analyst conference calls since most of them are restricted from writing on the company. This suggests that brokerage firms might already be working for possible bidders.

Hunter also refused to characterize the level or type of interest it is getting from other bidders, and he wouldn’t rule out another type of transaction other than a take-over, saying it is looking at a number of “strategic alternatives”.

As for its aggressor, C.I., Hunter says he is “somewhat surprised” that it would bring a hostile bid in this industry; and he characterized C.I. as “an aggressive competitor”.

Phil Cunningham, president of Mackenzie Financial Services Inc., said he expected C.I. to recognize that Mackenzie offers greater depth, greater distribution and greater shelf space than it picked up in its deal for BPI Financial Corp. about a year ago. He said hat C.I. should be willing to pay up for these attributes.