Investors wishing to employ the strategy in the future will need to structure their bids carefully to minimize the risk of a mini-tender being successfully challenged or defeated.
Group Mach with respect to all of the Transat shares held by such depositing shareholder, regardless of whether the shares were actually taken up under the mini-tender. As a result, Group Mach would have been entitled to vote more shares than what it ultimately acquired in the mini-tender. In response to a public interest application brought by Transat, the Tribunal administratif des marchés financiers (Québec) ultimately cease-traded Group Mach’s offer on the basis that it was abusive and contrary to the public interest; however, Transat shareholders later benefited from Air Canada’s increasing the consideration under its offer to $18.00 per share. Both examples demonstrate how a mini-tender can pressure a potential purchaser to increase its offer, even if the mini-tender itself is unsuccessful, as was the case with Group Mach’s bid for Transat. In the case of HBC, Catalyst was able to strengthen its hand at the bargaining table. The Group Mach mini- tender also serves as a reminder that mini-tenders can attract harsh regulatory scrutiny, particularly if structured in a manner that a regulator views as heavy- handed and coercive, or if it is accompanied by aggressive marketing efforts or disclosure deficiencies – and with a tight time frame in which shareholders are required to make a decision. To date, mini-tenders in Canada remain relatively unregulated with the exception of historical CSA Staff Notice 61-301 – Staff Guidance on the Practice of Mini- Tenders , which contains guidance by the Canadian Securities Administrators (CSA) concerning mini-tenders made at a discount to the market price. The recent Catalyst/HBC and Group Mach/Transat situations have renewed regulatory interest in mini-tenders. However, it remains to be seen whether Canadian regulatory authorities will wade into the arena with more concrete guidance, including as to the acceptable timelines, terms and required disclosure associated with mini-tenders. Investors wishing to employ the strategy in the future will need to structure their bids carefully to minimize the risk of a mini-tender being successfully challenged or defeated.
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Governance Insights 2020
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