MBWS: ASAMIS takes stock, in view of a takeover bid – squeeze-out and calls for the mobilization of minority shareholders.

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MBWS: ASAMIS takes stock, in view of a takeover bid – squeeze-out and calls for the mobilization of minority shareholders.

Minority shareholders are concerned about the conditions that could be offered during a possible takeover bid which would be followed by a squeeze-out, by COFEPP following its capital increase to 78.5% on August 3. They expect an offer at least equal to that made to BDL Capital Management.

Apart from DIANA HOLDING, another key player could impact the success of the takeover bid: the discreet Canadian fund ALBERTA INVESTMENT MANAGEMENT Co (AIMCo). What could it ask for?

What would happen if COFEPP failed to acquire more than 90% of the capital?

ASAMIS is calling for the mobilization of minority shareholders to defend their interests.

1 – Who is AIMCo, the second shareholder of MBWS?

1.1 Presentation: a large, performing fund

"AIMCo is one of Canada’s largest and most diversified institutional investment firms with $168.3 billion of assets under management as of December 31, 2021. AIMCo was established on January 1, 2008, with a mandate to provide superior long-term investment results for its clients. AIMCo operates at arms-length from the Government of Alberta and invests globally on behalf of 32 pension, endowment, and government funds in the Province of Alberta."

Note from ASAMIS : 168.3 billion Canadian dollars = approximately 129.6 billion euros

Press Release from AIMCo on April 20, 2022

Alberta Investment Management Corporation Announces Record Investment Performance on behalf of its 32 Clients

Earning a total fund return of 14.7% outperforming an aggregate benchmark of 8.0% resulting in a record annual value-add of $7.7 billion.

Edmonton, Alberta – Alberta Investment Management Corporation (AIMCo) today announced its investment performance for the year ended December 31, 2021. On behalf of its Alberta-based pension, endowment and government fund clients, AIMCo earned a total fund return of 14.7% net of all fees — measuring a composite of its clients’ portfolios. This represents the strongest year in AIMCo’s history, surpassing an aggregate benchmark of 8.0%, resulting in a record annual value-add of $7.7 billion.
The annualized total fund returns over four and ten years are 7.4% and 8.6%, respectively. Total client assets under management at the end of the year were $168.3 billion.

Through active investment, in 2021, AIMCo achieved an excess return of 6.7% on total assets under management, over and above the composite benchmark. AIMCo’s Balanced Funds, those portfolios that represent the full investment capabilities of AIMCo, earned a net return of 16.2%, outperforming the benchmark by 7.3%, while Government & Specialty Funds earned a net return of 5.0%, outperforming the benchmark by 2.8% for the year.

1.2. The discreet investment policy of AIMCo vis-à-vis MBWS

This fund has never been talked about, for example on the vote of resolutions. It supports the leadership management policy.

We have been unable to trace the date of its first purchase of MBWS stocks.

Nonetheless, it held 2.39% as of December 31, 2020, before the 2021 capital increase where it increased to 3.52%. It is now the first investor behind COFEPP.

We can logically predict that AIMCo will be courted by COFEPP!

ASAMIS’ analysis :

AIMCo is one of those large, well-managed funds that expect a substantial return on their investments.

Although AIMCo is not an activist fund, its mission is to manage the funds entrusted to it in the best possible way: AIMCo therefore has no reason to sell off its stake in MBWS.

2 – A failed takeover bid is not necessarily harmful to minority shareholders!

Minority shareholders of MBWS have their hands shaking because the share price, after having exploded from €1.42 to €2.56 (on August 8, 2022), following the announcement of the sale by BDL of its 8.5% stake on August 3, went down to €2.34 (August 16, 2022) due to profit taking by short-term speculators. Price swings are strong due to understandable speculation.

They’re worrying and wondering what would happen if COFEPP launched a takeover bid and it failed? We would remain "stuck" with our shares: would that be a disaster?

The HERIARD-DUBREUIL (REMY COINTREAU) family, which owned nearly 70% of OENEO, launched a simplified takeover bid followed by a squeeze-out from February 9 to 19, 2020 with a 12% premium at €13.50. A shareholder recalled, : « as a reminder, ANDROMEDE had already made an offer for Oeneo in 2013 at... €3.20 (well, well...).»

It was specified in the motivations of the operation that OENEO could thus "escape the constraints of listing, which require the Group to disclose crucial information in a context of strong competition"... a motivation which COFEPP could quite take advantage of!

It failed because the POLYGON GLOBAL PARTNER fund stated on February 18 that it held 10.1%. HERIARD-DUBREUIL did not want to up its offer and OENEO therefore remained listed.

Share price on August 16, 2022: 15.85 euros, i.e. +17.4% on the takeover bid.

Dividend voted at the AGM of 7/27/2020: 0.60 euros.

Facing a parsimonious offer, the minority shareholders did well to keep their shares!

In the case of MBWS, it should be the same because the company has many assets to promote itself : no debt, abundant cash, well-known brands, buoyant market, renovated production tool, serious management having eliminated sources of loss and reduced expenses, exemption from income tax up to €70 million, etc.

The risks of unfair competition internally are monitored by the Competition Authority, which imposed a fine of 7 million euros on COFEPP in 2021 and which may not be as conciliatory in the event of a repeat offence..

3 – Could minority shareholders counter the squeeze-out?

"At the end of any public offer, if the securities not tendered to the offer represent less than 10% of the capital and voting rights, the majority shareholder may implement, within 3 months, a compulsory withdrawal on these securities. The minority shareholders are then compensated and the securities of the target company delisted from the market. An independent expert is appointed by the target company to determine the price of the squeeze-out (fairness opinion) » [AMF (French SEC) extract].

Even without concerted action, if the minority shareholders shared the same point of view on the defense of their interests and considered the offer insufficient, they would be able to defeat a squeeze-out.

You just need to take a look at the shareholder pie chart on the ASAMIS website to see that AIMCo + DIANA HOLDING + ASAMIS total more than 10% of the capital of MBWS, not counting the other funds... COFEPP would have to bring together more than 90% of the capital for a public squeeze-out offer to be validated by the AMF.

COFEPP's proposal will therefore have to be honest in order to win their agreement. The sale of the BDL Capital Management block at €3.20 per share + €0.2 per BSA validated the value estimated by ASAMIS in May 2022 (€3.3); thus the recent sharp revaluation of the share price is it justified.

It should also be remembered that the deadline for exercising BSAs is September 28, 2022, i.e., they would no longer have any value the next day if they were not exercised... The countdown has begun: COFEPP did not wait for them to lose all value and bought them from BDL at €0.2. We demand the same treatment!

We demand the same treatment!

ASAMIS is calling for minority shareholders to not only remain calm but also to mobilize, update their positions on the ASAMIS website, and make a donation to strengthen the association's intervention capacity. Sometimes, we wonder if this is the time to act: in this case, it is now that we must mobilize.