AIP, Dutil family to take Canam Group private in $875 mln deal

Canam Group Inc (TSX: CAM), a Saint-Georges, Québec designer and fabricator of customized products for the construction industry, has agreed to be taken private by a consortium of the Dutil family and American Industrial Partners (AIP), a U.S. private equity firm. The deal, which is valued at $875 million, including debt, will see the consortium acquire all of the company’s common shares, except shares currently owned by the Dutil family, which will be rolled over. Existing shareholders Caisse de dépôt et placement du Québec and Fonds de solidarité FTQ are also expected to participate. Upon the transaction’s completion later this year, AIP will hold a majority stake in Canam.

PRESS RELEASE

Canam Group announces going-private transaction by a group of investors led by the Dutil Family

SAINT-GEORGES, QC, April 27, 2017 /CNW Telbec/ – Canam Group Inc. (TSX: CAM) (“Canam” or the “Corporation”) today announced that it has entered into a definitive agreement pursuant to which members of the Dutil family (collectively, the “Family Group”) and American Industrial Partners (“AIP” and collectively with the Family Group, the “Investors”) will acquire, directly or indirectly, all of the issued and outstanding common shares of the Corporation (the “Shares”), except for approximately 4.7 million Shares already owned by the Family Group which the Family Group will roll over in connection with the transaction (the “Rollover Shares”), for a price of $12.30 per Share in cash. Caisse de dépôt et placement du Québec (“Caisse”) and Fonds de solidarité FTQ (“Fonds”), long time shareholders of Canam, are expected to participate in the transaction as equity investors, including by rolling all or part of their Shares, and as such, Caisse, Fonds and the Family Group could own as much as 40% of equity in the future company.

Transaction Highlights

Shareholders (except for the Family Group with respect to their Rollover Shares) will receive $12.30 per Share in cash, representing a premium of 98.4% to the closing price of the Shares on the TSX on April 26, 2017, the last trading day prior to the date of this announcement.
The purchase of 100% of the equity of Canam represents a total enterprise value of approximately $875 million, including the assumption of existing indebtedness.
The Board of Directors of Canam (the “Board of Directors”), acting on the unanimous recommendation of the special committee of the Board of Directors comprised solely of independent directors (the “Special Committee”), unanimously approved the transaction and unanimously recommends that shareholders vote in favour of the transaction.
Canam will maintain its head office in Québec.

“The proposed transaction is a win-win for all of Canam’s stakeholders,” said Marc Dutil, President and Chief Executive Officer of the Corporation. “The transaction provides shareholders with a significant cash premium for their shares, while ensuring the long-term success of the business for its employees, business partners and other stakeholders. AIP, with whom we have worked in the past, will provide expertise to stimulate Canam’s competitiveness and growth.

Marcel Dutil, Chairman of the Board of Directors stated: “Canam is a flagship company in Québec, and AIP recognizes this to be one of Canam’s strengths. As such, we and our partners at AIP are maintaining the Corporation’s head office in Québec.”

“We are very pleased and privileged to be asked by the Dutil family to be their partners in the take private of Canam,” commented Mr. Joel Stanwood, Partner at AIP. “We have worked exceptionally well with the Dutil family on past projects and we look forward to assisting Canam to realize operational value throughout the organization”. Mr. Joel Rotroff, also a Partner at AIP commented that “Canam is a great Québec success story and we are excited to work together with the Dutil family to build upon its long standing tradition of excellence. We have a deep respect for Canam’s entrepreneurial culture and we will be an active and dedicated partner collaborating with the Dutil family and Canam’s talented management team and employees in the execution of an operating agenda aimed at furthering Canam’s leadership position in its industry”.

The Special Committee, comprised of Pierre Lortie, Elaine Beaudoin and Sean Finn, all of whom are independent directors of the Corporation, after receiving the fairness opinions of BMO Capital Markets (“BMO”) and Deloitte LLP (“Deloitte”), a formal valuation of Deloitte and legal and financial advice, has unanimously recommended that the Board of Directors approve the arrangement agreement and that the Shareholders (other than the Family Group, and Caisse and Fonds should they elect to participate as equity investors) vote in favour of the arrangement resolution at the special meeting of shareholders to be called to approve the transaction (the “Meeting”). The Board of Directors, after receiving the fairness opinions of BMO and Deloitte, the formal valuation of Deloitte, legal and financial advice and the recommendation of the Special Committee, has unanimously (with Marcel Dutil, Marc Dutil and Anne-Marie Dutil Blatchford abstaining from voting) determined that the arrangement resolution is in the best interests of the Corporation and is fair to the Shareholders (other than the Family Group, and Caisse and Fonds should they elect to participate as equity investors) and unanimously (with Marcel Dutil, Marc Dutil and Anne-Marie Dutil Blatchford abstaining from voting) recommends that the Shareholders (other than the Family Group, and Caisse and Fonds should they elect to participate as equity investors) vote in favour of the arrangement resolution.

In connection with the proposed transaction, each director and senior officer of the Corporation has agreed to support and vote all of such individual’s Shares in favour of the arrangement resolution and each member of the Family Group has entered into an irrevocable support and voting agreement pursuant to which it has agreed to support and vote all of its Shares in favour of the arrangement resolution and against any resolution submitted by any Shareholder that is inconsistent therewith. Consequently, shareholders holding approximately 14.0% of the outstanding Shares have agreed to vote their Shares in favour of the transaction. Caisse and Fonds are expected to participate in the transaction as equity investors and, as such, are expected to enter into support and voting agreements pursuant to which they would agree to vote all of their Shares in favour of the arrangement resolution, in which circumstances shareholders holding approximately 27.9% of the outstanding Shares (comprising directors and officers of the Corporation, the Family Group, Caisse and Fonds) would have agreed to vote their Shares in favour of the transaction. The transaction will involve a rollover of all the Shares owned by the Family Group except for 700,114 Shares which will be sold for cash by Marcel Dutil’s holding company, Placements CMI Inc. (“Placements CMI”) or one of its affiliates. Upon completion of the transaction, AIP will own a majority of the issued and outstanding shares of Canam and control its Board of Directors.

Fairness Opinion and Formal Valuation

The Special Committee retained BMO as financial advisor and Deloitte as independent valuator. BMO and Deloitte each provided an opinion that, as at April 26, 2017, subject to the assumptions, limitations and qualifications contained therein, the consideration to be received by the shareholders (other than the Family Group in respect of their Rollover Shares, and Caisse and Fonds should they elect to participate as equity investors) pursuant to the transaction is fair to such shareholders from a financial point of view. Deloitte also provided the Special Committee with a formal valuation that was completed under the supervision of the Special Committee. The formal valuation dated as of April 26, 2017, determined that, as at March 4, 2017, subject to the assumptions, limitations and qualifications contained therein, the fair market value of the Shares ranged from $10.58 to $12.42 per Share. The fairness opinions and formal valuation will be included in the management information circular to be filed and mailed to shareholders in connection with the approval of the transaction at the Meeting.

Transaction Details

The transaction will be implemented by way of a statutory plan of arrangement under the Business Corporations Act (Québec) and is subject to court approval and the approval of the shareholders of the Corporation. Implementation of the transaction will be subject to the approval of at least 662/3% of the votes cast by shareholders present in person or represented by proxy at the Meeting and the approval of a simple majority of the votes cast by the Corporation’s minority shareholders present in person or represented by proxy at the Meeting, being all the shareholders of the Corporation other than the Family Group and Caisse and Fonds which are expected to participate in the transaction as equity investors, and any of their respective affiliates. Further details regarding the applicable voting requirements will be contained in the management information circular to be filed and mailed to shareholders in connection with the proposed transaction.

The arrangement agreement provides for a non-solicitation covenant on the part of the Corporation, subject to customary “fiduciary out” provisions. The arrangement agreement also provides the Investors with a right to match. A termination fee of $14 million would be payable by the Corporation to the Investors in certain circumstances, including if the Investors fail to exercise their right to match in the context of a superior proposal supported by the Corporation. The Investors have agreed to pay the Corporation a termination fee of $14 million if the transaction is not completed in certain circumstances. The transaction is subject to customary closing conditions, including receipt of regulatory approval, is not subject to any financing condition and is expected to close no later than September 1, 2017.

The Corporation intends to mail a management information circular to its shareholders in the coming weeks and to hold the Meeting before June 30, 2017. Additional details regarding the terms and conditions of the transaction as well as the rationale for the recommendations made by the Special Committee and the Board of Directors will be set out in the management information circular to be filed and mailed to shareholders which, together with the arrangement agreement, will be available under Canam profile at www.sedar.com.

Annual General Meeting

Canam confirms that its annual general meeting will be held on Friday, April 28, 2017 at 11 a.m. in Saint-Georges (Quebec), as previously announced.

Early Warning Disclosure by Placements CMI Inc.

Further to the requirements of Regulation 62-104 respecting Take-Over Bids and Issuer Bids and Regulation 62-103 respecting the Early Warning System and Related Take-Over Bid and Insider Reporting Issuer with respect to the Corporation, Placements CMI filed an early warning report on November 24, 2011 in connection with the acquisition of 935,000 Shares of the Corporation. Placements CMI stated that the acquisition was made for investment purposes. On April 27, 2017, Placements CMI filed an amended early warning report stipulating that together with AIP, it intends to acquire, directly or indirectly, all of the issued Shares of the Corporation (other than the Rollover Shares), by way of a plan of arrangement and for which it entered into an irrevocable support and voting agreement pursuant which it has agreed to support and vote all of its shares in favour of the plan of arrangement resolution and against any resolution submitted by any shareholder that is inconsistent therewith. A copy of Placements CMI’s related early warning report has been filed with the applicable securities commissions and will be made available on SEDAR at www.sedar.com, and further information may be obtained by contacting Mr. Louis Guertin, Vice-President, Legal Affairs of the Corporation, at 450-641-4000.

Advisors

Norton Rose Fulbright Canada LLP acts as independent legal counsel to the Special Committee and Fasken Martineau DuMoulin LLP acts as legal counsel to Canam. BMO is the financial advisor to the Special Committee and Deloitte has been retained by the Special Committee as independent valuator in accordance with applicable securities laws.

Stikeman Elliott LLP and Ropes & Gray LLP act as legal counsel for the Investors and Stein Monast LLP acts as legal counsel to the Family Group. Morgan Stanley is the financial advisor for AIP. McCarthy Tetrault LLP acts as legal counsel to Caisse and Fonds.

About Canam Group Inc.

Canam specializes in designing integrated solutions and fabricating customized products for the North American construction industry. Each year, Canam takes part in an average of 10,000 building, structural steel and bridge projects, which can also include the supply of preconstruction, project management and erection services. The Corporation operates 23 plants across North America and employs over 4,650 people in Canada, the United States, Romania and India.

About American Industrial Partners

American Industrial Partners is an operationally oriented middle-market private equity firm that makes control investments in North American-based industrial businesses serving domestic and global markets. The firm has deep roots in the industrial economy and has been active in private equity investing since 1989. To date, American Industrial Partners has completed over 70 platform and add-on transactions and currently has US$4.1 billion of assets under management on behalf of leading pension, endowment and financial institutions. American Industrial Partners invests in all forms of corporate divestitures, management buyouts, recapitalizations, and going-private transactions of established businesses with leading market shares with revenues of between US$200 million to US$2 billion.

For further information: François Bégin, Vice President, Communications, Canam Group Inc., 418-228-8031/ 418-225-1355 (mobile phone), francois.begin@groupecanam.com

Photo courtesy of Canam Group Inc