GMP Capital Inc. plans to pay out $40-million to its shareholders to settle a month-long battle over plans to acquire Richardson GMP Ltd., one of Canada’s largest independent wealth managers.
Toronto-based GMP Capital announced late on Monday that it will commit $40-million of its cash to a share buyback, a move that ended a shareholder revolt led by Kevin Sullivan, the investment bank’s former chief executive, a number of other former executives and a hedge fund manager. In return, Mr. Sullivan said he and his former colleagues plan to vote in favour of publicly listed GMP Capital’s planned acquisition of privately held Richardson GMP.
Winnipeg’s Richardson family owns stakes in both GMP Capital and Richardson GMP and also agreed to support the reworked $420-million deal. The transaction was first struck back in February, restructured in August to reflect the impact of the pandemic, and has now been tweaked a third time after facing opposition in late August from Mr. Sullivan, former employees and Anson Funds, a Toronto-based hedge fund.
“The revised terms of the Richardson GMP transaction represent a fair and balanced solution in the best interests of GMP and all other parties allowing this important transaction to move forward,” said Donald Wright, chair of GMP Securities, in a press release. “We continue to believe that the best path forward is to consolidate the ownership of Richardson GMP and provide our investment advisor partners and our clients with certainty going forward.”
Richardson GMP is home to 165 adviser teams who oversee $28-billion in client assets. If the deal with GMP Capital is approved at a shareholder vote scheduled for Oct. 6, the advisers would own 28.5 per cent of the company, while existing GMP Capital shareholders would hold 31.4 per cent and the Richardson family would be the largest shareholder, with 40 per cent.
"I have always said that the Richardson GMP transaction is the right transaction for all parties concerned,” said Mr. Sullivan. “I believe that, with the $40-million that will be paid to minority common shareholders of GMP through a share buyback at $2.42 per share of GMP, it is a fair deal to GMP’s minority shareholders.”
On Monday, Mr. Sullivan withdrew a slate of directors he put forward for GMP Capital’s upcoming shareholder meeting. As part of the settlement, GMP Capital agreed to pay Mr. Sullivan’s legal costs. Mr. Sullivan owns 4 per cent of GMP’s shares. Former colleagues with an additional 4.3 per cent of the company’s stock have also now agreed to support the transaction, after coming out against it last week.
The share buyback is expected to take place by late November. GMP Capital has about $120-million of cash, part of which came from the sale of the company’s capital markets division last year to St. Louis-based investment dealer Stifel Financial Corp. GMP Securities said on Monday that it cancelled plans to pay out a 15-cent-a-share special dividend as part of the transaction.
Editor’s note: (Sept. 29, 2020) GMP Securities' dividend plan has been corrected in the online version of this story.
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