What's Happening?
First National Financial Corporation has finalized a plan of arrangement under the Business Corporations Act of Ontario, resulting in its acquisition by private equity funds managed by Birch Hill Equity
Partners Management Inc. and Brookfield Asset Management. The acquisition involved a newly-formed vehicle purchasing all outstanding common shares of First National, except those owned by founders Stephen Smith and Moray Tawse, for $48.00 per share. Smith and Tawse retain a 19% interest, while Birch Hill and Brookfield hold 62%. The company's senior unsecured notes were redeemed, and its shares are set to be delisted from the Toronto Stock Exchange. The company plans to amalgamate with the acquisition vehicle, continuing as First National Financial Corporation.
Why It's Important?
This acquisition marks a significant shift in ownership for First National, one of Canada's largest non-bank mortgage originators. The involvement of major private equity firms like Birch Hill and Brookfield underscores the value and potential growth opportunities seen in First National's business model. For shareholders, the buyout provides a substantial cash return, while the continued listing of preferred shares ensures ongoing investment opportunities. The strategic move could influence the Canadian mortgage market, potentially affecting competition and service offerings.
What's Next?
Following the completion of the acquisition, First National will proceed with the amalgamation process, maintaining its operations under the same name. The company will continue to be a reporting issuer under Canadian securities laws, with its preferred shares remaining listed on the TSX. Shareholders and noteholders are advised to submit necessary documentation to receive their consideration. The new board of directors has been expanded, and further changes may occur as the company integrates with its new ownership structure.
