CI Financial Shareholders Okay Company’s Takeover by Mubadala

Decks have been cleared for the UAE-based Mubadala Capital, the asset management unit of Mubadala, to acquire the asset and wealth management firm CI Financial with the Canadian firm’s shareholders approving the deal in a $3.4 billion transaction.

In a statement to the Toronto Stock Exchange (TSX), CI Financial said that the transaction, which received approval from 99.9% of shareholders, is expected to close by end of June this year, pending regulatory clearances and other customary conditions. The total agreement, including debt, values CI at $8.53 billion.

The transaction has been unanimously recommended by CI Financial’s board of directors, excluding interested directors. The proposed deal is anticipated to bolster CI Financial’s expansion in the US, where it operates as Corient.

It may be recalled that Mubadala Capital has agreed to acquire CI Financial in an all-cash transaction nearly six months ago and valued CI Financial’s equity at approximately $3.34 billion. Besides, the transaction with Mubadala Capital is said to provide the Canadian company with a stable and well-funded platform, enabling reinvestment into its business and strategy.

Terms of Agreement

According to the terms of the agreement, Mubadala Capital will pay $22.51 per share for all outstanding CI Financial shares. These shares exclude those held by members of CI Financial’s senior management, who will enter into equity rollover agreements.

Mubadala Capital’s consideration marks a 33% premium to the Canadian company’s last closing price and a 58% premium to its 60-day volume-weighted average price on the TSX.

CI Financial CEO Kurt MacAlpine intends to roll all his equity into the transaction. Other senior management members, collectively holding up to 1.5% of the company’s shares, are expected to participate in equity rollover agreements.

Additionally, CI Financial chairman William Holland may roll over 25% of his total holdings as part of the transaction. All equity rollovers will be executed at the cash purchase price.

Following the closing of the deal, CI Financial’s shares will be delisted from the TSX and will become a private asset and wealth management company.

However, the company will remain a reporting issuer under Canadian securities laws due to its outstanding debentures and notes. Mubadala Capital has committed up to $532 million in additional cash at closing to reduce preferred equity outstanding.

Upon the closing of the transaction, CI Financial will continue to operate under its existing structure and management team. It will maintain its headquarters in Canada.

CI Financial manages, advises on, and administers about $367.4 billion in client assets as of 30 September 2024. It operates in three segments, namely asset management, Canadian wealth management, and US wealth management.

Strategic Implications

After the deal was announced in November last year, William E Butt, CI Financial’s lead director and chair of its special committee, emphasised the benefits of the transaction for shareholders and Canada’s financial sector.

“This transaction, with its significant cash premium, represents an exceptional outcome for CI shareholders,” Butt said. “It also provides long-term capital to underpin the building of a Canadian champion in the wealth and asset management industries,” he added.