Cosette Says It’s Drawing Buyer Interest

TORONTO (Reuters) – Cossette Inc (KOS.TO), one of Canada’s leading advertising and marketing companies, and the subject of a hostile takeover bid, is drawing the attention of other potential bidders, but has no firm offers yet.

Cossette said in a statement on Friday it had received several written expressions of interest from third parties, and it invited some of the suitors to review its books further.

“Cossette has received through its financial adviser, BMO Capital Markets, several written expressions of interest from third parties in respect of a potential acquisition of Cossette, all of which are financially superior to the Cosmos proposal,” the company said.

Private equity company Cosmos Capital Inc made an unsolicited offer for Cossette in July for C$4.95 a share, at the time a 52 percent premium to the stock price.

The bid was rejected by a special committee that said it would solicit other offers, and the company opened a data room, banning Cosmos from entering, and put itself on the market.

Stock in Cossette surged 10.5 percent on Friday, closing out the day at C$5.69, about 15 percent higher than the Cosmos offer.

“It is expected that final offers from third parties in respect of a potential acquisition of all issued and outstanding shares of Cossette will be received in the coming weeks,” the ad agency said.

Cossette said there was no guarantee it would receive a definitive takeover offer as a result of the process.

The company did not identify potential bidders, but banking sources say interested parties may include foreign companies looking for a stronger foothold in Canada, especially in the French-speaking province of Quebec where Cossette is strong.

Cosmos, led by two former top executives from Cossette, claims its offer has the backing of investors controlling some 37 percent of the company, including Bergundy Asset Management, with 11.1 percent, and Beutel Goodman & Co, with 7.6 percent. However, some bankers say that support would evaporate if a higher bid comes in.

Cosmos members control 18.7 percent of Cossette.

Sources familiar with the situation say the data room has been visited by about 20 interested parties.

Cosmos Capital is controlled by Francois Duffar, a former director and officer of Cossette. Georges Morin, another former director and officer, is also among Cosmos investors.

($1=$1.04 Canadian) (Reporting by Pav Jordan; editing by Rob Wilson)