Deal Maker of the Year Awards 2012 WINNER - CANADA
DEAL: Miranda Technology to be acquired by Belden
NAME: Robert Yalden COMPANY: Osler, Hoskin & Harcourt LLP POSITION: Partner ADDRESS: 1000 De La Gauchetiere Street West, Suite 2100, Montreal, Quebec, Canada H3B 4W5
TEL: 514-904-8120 FAX: 514-904-8100 EMAIL:
ryalden@osler.com WEBSITE:
www.osler.com
DEAL OVERVIEW:
One of Canada’s oldest and largest business law firms with an international presence, Osler, Hoskin & Harcourt is recognised for the breadth and depth of its practice. Firm partner Robert Yalden, who specialises in M&A, corporate governance and corporate finance, speaks about Osler’s recent role in the buyout of Miranda Technologies by Belden and the rise of shareholder activism in Canada.
Consistently rated as having one of the strongest M&A practices in Canada, Osler’s practice covers all areas of business law and is at the heart of the country’s business community and business law developments. The firm has offices in Toronto, Montreal, Calgary, Ottawa and New York employing over 400 legal professionals.
Yalden cites the recent acquisition of Miranda Technologies, a Montreal-based player in the television broadcasting equipment sector, by Belden (a global player in signal transmission solutions) as an example where Osler’s crossborder team, acting as legal counsel to Miranda, successfully leveraged his organisation’s platform to bring the transaction to close. Yalden points out that the transaction also saw aggressive activism on the part of U.S. hedge fund, a phenomena that is more and more common in Canada.
Yalden’s role on the deal began almost three years ago when Miranda’s Chairman Brian Edwards met with him to discuss his concern about Miranda’s stock being undervalued - it was then trading in the Cdn$5.00 range - and, given that the company was debt free and generating good cash flow, the possibility that it might be a prime prospect for an unsolicited take-over bid.
“Brian was concerned to equip the company and the board to deal with that possibility. We were retained to work with the board and the company on a defence planning exercise that included putting a shareholder rights plan in place,” Yalden says.
In mid-2011, by which time the stock had edged up to the Cdn $7.00 range, Edwards’ foresight became obvious. Two events transpired more or less simultaneously. First, the company started to get unsolicited expressions of interest from various parties that could see Miranda’s attractiveness as a
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target. Second, JEC Capital, a US-based hedge fund, began acquiring Miranda stock and approached the company with increasing intensity to try to put it in play. This included deploying strategies that shareholder activists now regularly use in Canada: acquiring a sufficiently large block of shares to threaten calling a shareholder meeting to replace directors if the activist’s demands are not acceded to.
However, Yalden notes that the Board remained focused on its long term objectives and did not allow JEC to push it into making hasty decisions or into trying to do a deal it did not think was the right one for Miranda.
“After all the board had been through with JEC, it might have been tempting to conclude a deal with one of the parties that the company had already had discussions with,” Yalden says. “But the board decided that because the price was not yet right it was more appropriate to seek out offers through a formal publicly announced process.”
The approach involved talking to several other parties in order to see if there was a transaction that would in fact be in the company’s best interests and one that would enable it to deliver real value to its shareholders, “many of whom were institutions that had been patient long term supporters of the Company,” says Yalden.
“Ultimately, the process led to a decision to strike a deal with a US strategic player, Belden Inc. that had the right kind of platform for Miranda to transition onto in order to have the resources and support needed to keep growing effectively.”
On June 5, 2012 Belden announced that it had entered into a definitive agreement to make an all-cash offer to acquire Miranda for Cdn$17.00 per share, well above where Miranda started three years ago and representing an enterprise value of approximately Cdn$345 million.
The experiences that Miranda had to deal with as it navigated toward a successful strategic transaction in the face of ongoing pressure from a U.S. based hedge fund is symptomatic of a broader trend: the rise of aggressive shareholder activism in Canada. 2012 saw a number of high profile Canadian
companies having to deal with an array of hedge funds: Canadian Pacific vs. Pershing Square; Agrium vs. Jana Partners; TELUS Corporation vs. Mason Capital (where Yalden was acting for Telus); and the list goes on. At a time when M&A activity is otherwise relatively moderate compared to pre-2008 levels, the advent of the shareholder activist is something Canadian companies are increasingly aware of and is part of a new reality that they need to be ready to deal with.
BIO:
Robert’s areas of specialty include mergers and acquisitions, corporate finance and corporate governance. Robert served as Co-Chair of the firm’s Mergers and Acquisitions Group for ten years prior to joining the firm's Executive Committee, on which he currently serves. Robert was part of the team that opened the firm's Montréal office in 2001, before which he was based in the firm’s Toronto office.
Robert’s career with Osler spans 20 years, during which he has been involved with some of Canada’s most innovative and groundbreaking transactions. He was part of the Osler legal team that implemented the first poison pill in Canada and has since worked with a wide range of companies on their defense strategies. He led the Osler legal team involved in Canada’s largest ever completed leveraged buy-out (BCE’s disposition of its Yellow Pages business to KKR), as well as in the largest ever buy-out in the oil field services sector. He has recently been involved with a significant proxy fight that has seen the problem of “empty voting” on the part of hedge funds receive considerable public scrutiny in Canada. Robert has also acted in connection with numerous M&A transactions, including hostile and friendly business acquisitions, special committee mandates, proxy fights, going-private transactions and strategic alliances. In addition, Robert is active in advising on public and private securities financings, corporate governance issues (including for a range of crown corporations) and general public company matters. Robert is a former Supreme Court of Canada Law Clerk, teaches a course in comparative corporate governance at McGill University’s Faculty of Law, and has written extensively on business law issues.
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