Home Capital signs definitive agreement with Smith Financial
Torys is acting as counsel to Home Capital with a team led by Rima Ramchandani and John Emanoilidis, and that includes Michael Jason, Brett Saulnier, Christopher Tworzyanski and Andrea Das-Wieczorek (corporate/M&A), Blair Keefe and Eli Monas (financial services regulatory), Omar Wakil and Eric Patenaude (competition), Andrew Gray (arrangement proceedings), Jennifer Lennon and Brad Tartick (employment and executive compensation), Amanda Balasubramanian and Simon Williams (lending), Ed Fan (IP), Molly Reynolds (privacy), Ebad Rahman (technology), Corrado Cardarelli and Richard Johnson (tax).
On November 21, 2022, Home Capital Group Inc. (“Home Capital”) announced that it entered into a definitive agreement to be acquired by a wholly-owned subsidiary (the “Purchaser”) of Smith Financial Corporation (“SFC”).
Under the terms of the arrangement agreement, which will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario), the Purchaser will acquire the issued and outstanding common shares of Home Capital, not already owned by SFC, in cash for C$44.00 per share. The transaction values the equity of Home Capital at approximately C$1.7 billion.
The transaction is expected to close in mid-2023. In addition to requiring the approval of 66 2/3% of the votes cast by Home Capital shareholders at a special meeting still to be set, the transaction is subject to the receipt of regulatory approvals under the Bank Act (Canada), the Trust and Loan Companies Act (Canada) and the Competition Act (Canada). A reverse termination fee of C$60 million is payable by the Purchaser to Home Capital if the required regulatory approvals are not obtained on or before the outside date specified in the arrangement agreement, currently November 20, 2023, but which may be extended by up to an additional 90 days in certain circumstances.
If the transaction closes on or after May 20, 2023, the purchase price will be increased by an amount equal to C$0.00273973 per share in cash per day up to and including the day prior to the closing of the arrangement (equivalent to approximately C$0.25 per share for every three-month delay beyond May 20, 2023).
Further information can be found on Business Wire’s website.
Home Capital is a public company, operating through its principal subsidiary, Home Trust Company. Home Trust Company is a federally regulated trust company offering residential and non-residential mortgage lending, securitization of residential mortgage products, consumer lending and credit card services. In addition, Home Trust Company and its wholly owned subsidiary, Home Bank, offer deposits via brokers and financial planners, and through a direct-to-consumer brand, Oaken Financial.
Smith Financial is the family holding company of Stephen Smith and has investments in a range of public and private businesses across the financial services industry, including significant equity positions in Canada Guaranty Mortgage Insurance Company, Fairstone Bank of Canada, First National Financial Corporation, Glass-Lewis & Co., Equitable Bank and Peloton Capital Management and its private equity funds.