On May 9, 2000, UK-based AMVESCAP PLC, one of the world’s largest independent investment management companies with funds under management of approximately US$391.6 billion, and Trimark Financial Corporation (Trimark), Canada’s sixth largest mutual fund company, with approximately Cdn$24.8 billion of mutual fund assets under management, announced that they have entered into a merger agreement in a transaction valued at approximately Cdn$2.7 billion. The agreement will create Canada’s second largest mutual fund company.
Under the merger agreement, Trimark shareholders will have the flexibility to receive a mix of consideration valued at approximately Cdn$27 per share including a fixed amount of cash of approximately Cdn$760 million and, at current prices, approximately Cdn$1.97 billion in shares or other AMVESCAP linked securities, all subject to proration. The Trimark shareholders can elect to receive either AMVESCAP ordinary shares or shares of an AMVESCAP Canadian subsidiary, which are exchangeable into ordinary shares (Exchangeable Shares). Additionally, Trimark shareholders can elect to receive consideration in the form of up to Cdn$1.3 billion in principal amount of equity subordinated debentures (ESDs) subject to a minimum ESD issuance of Cdn$100 million. If the trading of the underlying AMVESCAP ordinary shares increases or decreases by up to 12.5 per cent from the current level, the number of shares to be issued will be adjusted accordingly. The final value of the consideration to be offered and the exact number of AMVESCAP ordinary shares or Exchangeable Shares to be issued will be based upon the weighted average of the Canadian dollar equivalent of the trading prices of AMVESCAP ordinary shares on the London Stock Exchange for a period of five consecutive trading days ending three business days prior to the closing.
The Exchangeable Shares will be exchangeable at the option of each shareholder for an equivalent number of AMVESCAP ordinary shares. The AMVESCAP shares are listed on the London, New York and Paris Stock Exchanges and are traded on the Frankfurt Stock Exchange. The Exchangeable Share option is designed to provide existing Trimark shareholders and management with the opportunity to participate in the growth and development of the combined organization through shares traded on the Toronto Stock Exchange. These Exchangeable Shares will represent one of only a few occasions that Canadian shareholders have been offered the opportunity to hold exchangeable shares in a UK-based company.
The merger agreement also allows Trimark shareholders to elect consideration in the form of a 6 per cent coupon, three year term ESD. The ESDs are a form of convertible debenture security with a strike price at the AMVESCAP ordinary share price calculated as of the issue date and an appreciation cap of 20 per cent above the strike price. The proposed term of the AMVESCAP ESD are substantially consistent with past issues in the Canadian market but with the added feature of convertibility at any time at the option of the holder as opposed to a conversion privilege only at maturity. This is the first time that such a security has been offered in Canada as part of an acquisition.
AMVESCAP has entered into voting agreements with five principal shareholders (including Robert Krembil and Arthur Labatt) representing approximately 35 per cent of the outstanding common shares of Trimark. Under these agreements, the shareholders irrevocably agree to vote their shares in favour of the transaction.
The board of directors of Trimark has unanimously recommended that shareholders vote in favour of the transaction. The board of directors came to these determinations based on the report of its special committee of independent directors (comprised of Ruth M. Corbin, James D. Fisher and William C. Harker) and the opinion of RBC Dominion Securities Inc., the financial advisor to the special committee and the board of directors, that the Arrangement is fair, from a financial point of view, to Trimark shareholders.
The transaction will be implemented through a court approved plan of arrangement in Canada and is subject to approval by the shareholders of both companies as well as regulatory approvals. Assuming approvals are obtained, Trimark and AMVESCAP hope to close the arrangement by the end of August 2000, but in any event, not later than November 15, 2000.
AMVESCAP is represented by the team of John Stransman and Brian M. Pukier of Stikeman Elliott. Goodman Phillips & Vineberg acted as special counsel to Trimark Financial Corporation. The GPV Toronto team included Dale Lastman, Jeffery Singer, Meredith Roth and Bob Vaux (corporate), Mitch Sherman and Maureen Berry (tax), Beau Zahrai and Shevaun McGrath. Gale Rubenstein will assist on certain OSFI matters related to the Trimark Trust and David Nadler will be assisting on the equity subordinated debentures. Alan Mark and Kelly Friedman are responsible for court approval of the Plan of Arrangement. The principal shareholders (including Robert Krembil and Arthur Labatt) with approximately 35 per cent of Trimark Financial Corporation, are represented by the team of Barbara Doherty, Brian Levett and Paul Edmonds (corporate and securities) and John Campbell and Susan Manwaring (tax) of Miller Thomson LLP. The special committee of the board of Trimark was represented by the team of Lawrence Wilder, Paul Stein, and Candice Solomon of Cassels Brock & Blackwell LLP.
Under the merger agreement, Trimark shareholders will have the flexibility to receive a mix of consideration valued at approximately Cdn$27 per share including a fixed amount of cash of approximately Cdn$760 million and, at current prices, approximately Cdn$1.97 billion in shares or other AMVESCAP linked securities, all subject to proration. The Trimark shareholders can elect to receive either AMVESCAP ordinary shares or shares of an AMVESCAP Canadian subsidiary, which are exchangeable into ordinary shares (Exchangeable Shares). Additionally, Trimark shareholders can elect to receive consideration in the form of up to Cdn$1.3 billion in principal amount of equity subordinated debentures (ESDs) subject to a minimum ESD issuance of Cdn$100 million. If the trading of the underlying AMVESCAP ordinary shares increases or decreases by up to 12.5 per cent from the current level, the number of shares to be issued will be adjusted accordingly. The final value of the consideration to be offered and the exact number of AMVESCAP ordinary shares or Exchangeable Shares to be issued will be based upon the weighted average of the Canadian dollar equivalent of the trading prices of AMVESCAP ordinary shares on the London Stock Exchange for a period of five consecutive trading days ending three business days prior to the closing.
The Exchangeable Shares will be exchangeable at the option of each shareholder for an equivalent number of AMVESCAP ordinary shares. The AMVESCAP shares are listed on the London, New York and Paris Stock Exchanges and are traded on the Frankfurt Stock Exchange. The Exchangeable Share option is designed to provide existing Trimark shareholders and management with the opportunity to participate in the growth and development of the combined organization through shares traded on the Toronto Stock Exchange. These Exchangeable Shares will represent one of only a few occasions that Canadian shareholders have been offered the opportunity to hold exchangeable shares in a UK-based company.
The merger agreement also allows Trimark shareholders to elect consideration in the form of a 6 per cent coupon, three year term ESD. The ESDs are a form of convertible debenture security with a strike price at the AMVESCAP ordinary share price calculated as of the issue date and an appreciation cap of 20 per cent above the strike price. The proposed term of the AMVESCAP ESD are substantially consistent with past issues in the Canadian market but with the added feature of convertibility at any time at the option of the holder as opposed to a conversion privilege only at maturity. This is the first time that such a security has been offered in Canada as part of an acquisition.
AMVESCAP has entered into voting agreements with five principal shareholders (including Robert Krembil and Arthur Labatt) representing approximately 35 per cent of the outstanding common shares of Trimark. Under these agreements, the shareholders irrevocably agree to vote their shares in favour of the transaction.
The board of directors of Trimark has unanimously recommended that shareholders vote in favour of the transaction. The board of directors came to these determinations based on the report of its special committee of independent directors (comprised of Ruth M. Corbin, James D. Fisher and William C. Harker) and the opinion of RBC Dominion Securities Inc., the financial advisor to the special committee and the board of directors, that the Arrangement is fair, from a financial point of view, to Trimark shareholders.
The transaction will be implemented through a court approved plan of arrangement in Canada and is subject to approval by the shareholders of both companies as well as regulatory approvals. Assuming approvals are obtained, Trimark and AMVESCAP hope to close the arrangement by the end of August 2000, but in any event, not later than November 15, 2000.
AMVESCAP is represented by the team of John Stransman and Brian M. Pukier of Stikeman Elliott. Goodman Phillips & Vineberg acted as special counsel to Trimark Financial Corporation. The GPV Toronto team included Dale Lastman, Jeffery Singer, Meredith Roth and Bob Vaux (corporate), Mitch Sherman and Maureen Berry (tax), Beau Zahrai and Shevaun McGrath. Gale Rubenstein will assist on certain OSFI matters related to the Trimark Trust and David Nadler will be assisting on the equity subordinated debentures. Alan Mark and Kelly Friedman are responsible for court approval of the Plan of Arrangement. The principal shareholders (including Robert Krembil and Arthur Labatt) with approximately 35 per cent of Trimark Financial Corporation, are represented by the team of Barbara Doherty, Brian Levett and Paul Edmonds (corporate and securities) and John Campbell and Susan Manwaring (tax) of Miller Thomson LLP. The special committee of the board of Trimark was represented by the team of Lawrence Wilder, Paul Stein, and Candice Solomon of Cassels Brock & Blackwell LLP.
Lawyer(s)
Robert Vaux
Paul M. Stein
Jeffrey Singer
Barbara R. C. Doherty
Mitchell J. Sherman
Lawrence D. Wilder
Shevaun McGrath
Alan H. Mark
Candice D.F. Solomon
Gale Rubenstein
R. Paul Edmonds
Brian M. Pukier
John M. Campbell
David J. Nadler
Brian Levett
Susan M. Manwaring
Kelly L. Friedman
Dale H. Lastman
Maureen Berry
Beau Zahrai