Newspaper article The Canadian Press

Garda World Faces $10 Million Break Fee If It Terminates Takeover Bid

Newspaper article The Canadian Press

Garda World Faces $10 Million Break Fee If It Terminates Takeover Bid

Article excerpt

Garda World shareholders to vote Oct. 24


MONTREAL - Garda World Security Corp. would have to pay a $10-million break fee if the security and logistics firm were to accept a superior takeover offer than the proposed $1.1-billion deal with its CEO and British private equity firm Apax Partners.

The company would also be obligated to pay an expense reimbursement fee of $3 million if the deal does not close under certain other circumstances, while Garda stands to receive $12 million if the purchasers fail to close the deal first announced earlier this month.

The details were included in a proxy circular Friday that was issued ahead of a planned Oct. 24 ratification vote by shareholders.

The Garda (TSX:GW) board of directors has unanimously recommended shareholders approve the privatization deal for the company, which was founded by chief executive Stephan Cretier in 1995.

Under the proposed agreement, Crepax Acquisition -- a joint venture between the Cretier Group and an Apax subsidiary -- will pay $12 per share in cash for the shares they do not already hold and will assume $625 million of net debt.

Cretier, who owns a large stake in Garda, will retain a 24 per cent stake after the transaction, while Garda directors and key executives are also rolling over their shares for a total ownership stake of 27.2 per cent.

The CEO first learned about Apax's interest in Garda when a major Canadian bank approached him in early February. Cretier quickly met in Florida with Apax officials before agreeing to work together on a formal proposal that was submitted in July.

Cretier began developing a strategic plan to grow Garda in December, but concluded its capital structure and limited access to capital were roadblocks to achieving those plans.

"Mr. Cretier concluded that Garda would need a partner with a strong ability to fund the corporation's growth plans in order to achieve these strategic initiatives," said the 154-page proxy circular send to shareholders.

Garda's board ultimately endorsed the transaction after Cretier indicated he would not support any alternative offer. …

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