By Danica Bennewies
Welcome back to another installment of Top Five Friday Finds – the weekly series where we share five of the corporate and securities law news stories that dominated the headlines, and our conversations, this week.
A month ago, Husky Energy Inc launched a $3.3 billion hostile takeover bid for its competitor, MEG Energy Corp. Two weeks following the offer MEG formally rejected it, stating that the deal “significantly undervalues” its shares and was not in the best interests of the company. Rather than accept the deal, MEG stated that it would “explore strategic options” for the company, suggesting the start of a bidding war. Husky remains optimistic that the bid will succeed by the January deadline for shareholders to tender. However, this week MEG CEO, Derek Evans, stated that shareholders should continue to ignore the bid, as Husky can afford to pay more. This control bid is one of only a handful that has occurred under Canada’s new takeover bid regime. A couple of years ago the regime underwent a makeover, with the new rules coming into effect in May 2016. The number of control bids declined significantly following the changes, with only 7 bids occurring in 2016 and 2017 combined, less than the total number of bids in 2015 alone.
The Ontario Teachers’ Pension Plan (OTPP), one of the largest institutional investors in Canada, launched a new private-equity fund on Thursday. The new fund, Peloton Capital Management, was founded by two former managing directors in the OTPP’s private equity team. The fund has an initial backing of $150-million, with expectations of raising up to $600-million from institutional investors. While the private-equity market already has many players, Peloton plans to differentiate itself by making long-term investments in companies. Typical private-equity investors make only three to five-year investments, however Peloton will be targeting eight to 12-year investments in companies, with a focus on investing in financial services, health care, and consumer business.
November doesn’t just mark the start of holiday music playing on the radio, it’s also Financial Literacy Month in Ontario. As part of this, the Ontario Securities Commission (OSC) has launched a number of new activities focused on educating investors to help them make better money-managing decisions. In particular, the OSC revealed two educational cryptoasset initiatives – GetSmarterAboutCrypto.ca and TBACoin.ca – aimed at highlighting both the risks and opportunities of investing in cryptoassets. GetSmarterAboutCrypto.ca gives investors an overview of the different cryptoasset products and services, how the OSC regulates them, and tips for investing. On TBACoin.ca, investors can see what a fraudulent initial coin offering website typically looks like to help them become aware of the common red flags. The OSC hopes that these initiatives will protect investors from fraud, while also fostering innovation in the financial sector.
Shifting our focus out west now, the Saskatchewan government made changes to the province’s insurance regulations on Monday, much to the relief of Manulife and Industrial Alliance Insurance and Financial Services Inc (IA). The two life insurance companies are currently both facing lawsuits brought by institutional investors. At issue in these proceedings is whether universal life contracts can be used as investment accounts that accept unlimited deposits. The government published an amendment to the regulations, which states that “no licensed insurer shall receive or accept for deposit funds or payments in excess of the amount required to pay the life insurance premium for the eligible period.”. This change could potentially bring an end to legal proceedings. In a statement issued Tuesday, Manulife said that they plan to ask the court to dismiss the claims, given the amended regulations.
In the U.S., Goldman Sachs is facing a major scandal involving multibillion-dollar international fraud. Two former Goldman Sachs investment bankers and a Malaysian financier were criminally charged on Thursday as part of an investigation into the alleged embezzlement of billions of dollars from a Malaysian government investment fund. The stolen funds were reportedly used to buy, among other items, a Picasso painting and diamond necklaces. The charges have placed significant pressure on Goldman Sachs, which has already been trying to repair its reputation after allegations of misconduct during the financial crisis. One of the investment bankers – Tim Leissner – has already plead guilty to bribery and money laundering charges, while the Malaysian financier, Jho Low, is still at large.
That concludes this week’s Friday Finds! Have a great weekend and we’ll see you back here next week for another round-up of news headlines.