TORONTO--(BUSINESS WIRE)--Home Capital Group Inc. (TSX: HCG) (“Home Capital” or the “Company”) today announced that it has received an unsolicited, non-binding and conditional expression of interest (the “Non-Binding Expression of Interest”) from an arm’s-length third party (the “Third Party”) expressing an interest in acquiring all of the Company’s issued and outstanding common shares, which the Board of Directors of the Company (the “Board”) has reviewed and determined is not in the best interests of the Company or its shareholders.
The Company received the Non-Binding Expression of Interest after it commenced its recently announced substantial issuer bid to repurchase for cancellation up to C$115,000,000 of its common shares from shareholders for cash (the “Issuer Bid”). The Issuer Bid was undertaken in part because the market price of the Company’s shares is below their book value.
In response to the Non-Binding Expression of Interest, the Board formed a special committee of non-executive, independent directors (the “Special Committee”) to review the Non-Binding Expression of Interest.
The consideration contemplated in the Non-Binding Expression of Interest was all cash and exceeded the maximum purchase price per common share (C$28.60) offered to the Company’s shareholders pursuant to the Issuer Bid. Following a review, in consultation with the Company’s financial advisors, BMO Capital Markets and TD Securities, and its legal advisors, Torys LLP, the Board has determined that the Non-Binding Expression of Interest undervalues the Company’s shares and falls short of reflecting Home Capital’s intrinsic value and its future growth potential based on the Company’s strategic plan and market-leading franchise.
The Third Party, in conjunction with another party, previously made an unsolicited, non-binding proposal to acquire all of the Company’s issued and outstanding common shares. This earlier proposal was subsequently terminated.
The Non-Binding Expression of Interest was subject to the fulfilment of a number of conditions, including the completion of satisfactory due diligence, negotiation of a definitive agreement and receipt of all required regulatory and shareholder approvals. The Non-Binding Expression of Interest also required that the Issuer Bid not be completed. As a result, the Company would have been required to withdraw the Issuer Bid, which provides near-term liquidity to participating shareholders.
The Company has no indication as to the Third Party’s current intentions, including whether it intends to submit an additional proposal or otherwise attempt to acquire the Company’s shares. The Company does not undertake any obligation to provide any updates with respect to the Non-Binding Expression of Interest or any other proposals, except as required under applicable law.
In light of the receipt of the Non-Binding Expression of Interest, the Company will be mailing a notice of change to all shareholders as soon as practicable and the notice of change will be filed under the Company’s SEDAR profile at www.sedar.com. No terms of the Issuer Bid are being varied and the expiry date of the Issuer Bid, September 13, 2022 at 5:00 p.m. (Eastern time), is not being extended at this time.
The Company’s offer to purchase relating to the Issuer Bid has a condition in section 7(e) relating to acquisition proposals that may be waived by the Company in its sole discretion. The Company has determined that it is still advisable to proceed with the Issuer Bid and absent further developments, the Company currently intends to waive the condition in section 7(e) of the offer to purchase relating to the Issuer Bid.
Neither the Company nor the Board makes any recommendation to shareholders as to whether to tender or refrain from tendering their shares to the Issuer Bid. Shareholders are strongly encouraged to review the Offer and the Notice of Change carefully, and to consult with their financial and tax advisors prior to making any decision with respect to the Issuer Bid.
Full details of the Issuer Bid are described in the Company’s offer to purchase and issuer bid circular dated August 8, 2022, as well as the related letter of transmittal and notice of guaranteed delivery, copies of which are available under the Company’s SEDAR profile at www.sedar.com.
Caution Regarding Forward Looking Statements
This press release contains forward-looking information within the meaning of applicable Canadian securities legislation, including relating to the terms and conditions of the Non-Binding Expression of Interest and the intentions of the Third Party. Please refer to Home Capital's 2022 Second Quarter Report, available on Home Capital’s website at www.homecapital.com, and on the Canadian Securities Administrators’ website at www.sedar.com, for Home Capital’s Caution Regarding Forward-looking Statements.
About Home Capital and Home Trust
Home Capital Group Inc. is a public company, traded on the Toronto Stock Exchange (HCG), operating through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering residential and non-residential mortgage lending, securitization of residential mortgage products, consumer lending and credit card services. In addition, Home Trust and its wholly owned subsidiary, Home Bank offer deposits via brokers and financial planners, and through a direct-to-consumer brand, Oaken Financial. Licensed to conduct business across Canada, we have offices in Ontario, Alberta, British Columbia, Nova Scotia, and Quebec.