Apollo’s Great Canadian Bid Wobbles as CI Rejects Bid and ISS Says No

Apollo Global Management Inc.’s bid for Great Canadian Gaming Corp. has hit more trouble, with a top shareholder publicly rejecting the $2.5 billion deal and two proxy advisory firms saying investors should turn it down.

CI Financial Corp.’s global asset management unit, which holds 14% of Great Canadian Gaming in various funds, said Wednesday that managers of those funds plan to vote against the offer. Glass Lewis & Co. and Institutional Shareholder Services also released reports opposing the deal.

“We do not see compelling evidence that the proposed buyout is in the best interests of shareholders at this time,” Glass Lewis said. Apollo’s timing is “opportunistic,” coming as Great Canadian Gaming has been hurt by Covid-19 restrictions even as it makes plans to renovate properties and expand in Ontario, the firm said.

The statement from CI Financial signals that Apollo is unlikely to win enough votes to seal approval without increasing the bid. Bloomberg News reported on Dec. 14 that Apollo was considering raising its offer but might also walk away if its shareholders opposed it. Other large shareholders including hedge fund BloombergSen Inc. and Burgundy Asset Management Ltd. are against the offer as well.

CI Financial is the largest shareholder and the three opposing firms collectively own about 37% of the casino operator, according to public disclosures and data compiled by Bloomberg. The deal requires approval of two-thirds of the shares voted.

Great Canadian’s shares rose 0.6% to C$37.29 at 9:35 a.m. in Toronto. That’s 4.4% below Apollo’s C$39-a-share offer price.

Apollo’s Great Canadian Bid Wobbles as
CI Rejects Bid and ISS Says No

BloombergSen is a Toronto-based fund manager and isn’t affiliated with Bloomberg LP, the parent of Bloomberg News.

ISS echoed shareholder concerns that Apollo’s bid takes advantage of a decline in Great Canadian’s share price caused by the disruption of the pandemic. The casino firm appears to have “sufficient financial strength to weather current business closures,” ISS said.

“The lack of a sale process heightens concerns regarding the timing of the offer, as shareholders cannot be confident they are receiving adequate value for their shares,” ISS said. “The ongoing recovery among gaming peers suggests that the company could return to historical valuation levels as the operating environment normalizes over time.”

Representatives of Apollo declined to comment. Great Canadian didn’t return messages seeking comment.

©2020 Bloomberg L.P.

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