A failure to agree on price scuppered talks aimed at rolling CI Financial Income Fund unit Blackmont Capital into Canaccord Capital, according to investment banking sources.
CI Financial and Canaccord were in preliminary negotiations on a deal that would have seen the mutual fund company swap full control of Blackmont and its 180 brokers for a minority stake in Toronto-based Canaccord, which is home to 425 investment advisers. But negotiations ground to a halt yesterday over the issue of just what Blackmont is worth.
CI Financial was looking for a price that valued the division at well over $100-million, while the potential buyer thought Blackmont was worth less than this, sources said.
In a note to employees, CI Financial chief executive officer Bill Holland and Blackmont CEO Bruce Kagan said: "While it is true that Canaccord did call us to see if we would be interested in pursuing a possible deal, that is where the story ends. We have not had nor will we be having any type of discussions/negotiations with Canaccord with respect to either a possible merger or sale of Blackmont."
"These sort of deals are extremely disruptive, so when there was no common ground on valuation, both sides decided to shut it down," a source said. The talks come at a time when brokerage houses that focus on individual investors are being hit by a sharp drop in client trading, and an equally sharp decline in corporate finance fees.
CI bought Blackmont for $251-million early in 2007 as part of a larger purchase that brought in $9.4-billion of new assets, including fund manager KBSH Capital Management.
HOOPP shoots for Teranet
There is a second contender for Teranet Income Fund, as the single largest shareholder in the land registry company signalled it is considering competing with a $1.7-billion hostile bid from OMERS.
The Hospitals of Ontario Pension Plan, or HOOPP, announced Monday it had signed a confidentiality agreement with Teranet and may make an offer for the company. HOOPP is a long-time backer of Teranet and owns a 10-per-cent stake.
HOOPP's move puts more pressure on OMERS to improve its $11-a-unit offer and strike a friendly deal.
The more enticing possibility is that HOOP, a $30-billion fund, is about to join the likes of OMERS, the Ontario Teachers Pension Plan and the CPP Investment Board as an active, direct player in private equity.
© 2007 The Globe and Mail. All rights reserved.
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