- »Great Canadian Shareholders Approve New Apollo Bid
Great Canadian Shareholders Approve New Apollo Bid
Shareholders played a game of chicken with a massive acquisition deal. And it paid off.
Apollo Global Management wanted to acquire Great Canadian Gaming Corporation for C$39 per share. The GCG board approved it, and the companies showed great confidence that it was a done deal.
The shareholders stood up, however, and not only complained about the low price on the deal, a majority of them voted against it. Apollo could have walked away but instead stepped up with an offer of C$45 per share. That did it.
Shareholders approved the deal, and it can now officially move forward.
Back and Forth
It started on November 10 when Great Canadian Gaming Corporation announced that Apollo Global Management wanted to acquire all of GCG’s outstanding stock at C$39 per share. That put the value of the deal at approximately $3.3 billion.
After the coronavirus pandemic brutalized land-based casino companies like Great Canadian in 2020, GCG welcomed the interest. There is no clear-cut end to the pandemic pain, and the offer was substantial. GCG would also keep its Canadian board and management at the company’s headquarters in Toronto.
The GCG board unanimously approved the deal. The only thing left was the vote of the shareholders…
Two of the company’s top shareholders were quick to criticize the deal: BloombergSen and CI Financial. The former said Apollo was trying to buy a Canadian monopoly at “rock-bottom prices.” Soon after, Burgundy Financial Asset Management, Institutional Shareholder Services joined Glass Lewis & Co in further opposition. They echoed the concerns but focused mainly on the undervaluation of GCG.
In total, opposing shareholders comprised more than one-third of the votes. However, the deal required a two-thirds vote. There was a significant chance that the deal could fall through.
Finding a Winning Bid
On December 21, two days before the scheduled shareholder meeting, Apollo upped its bid from C$39 per share to C$45. This number was closer to the point at which stocks traded in February, just weeks before the pandemic visited Canada and mandated the shutdown of all 26 GCG gambling properties.
Apollo would purchase 56 million outstanding shares in the multi-billion-dollar deal for 15.4% more than the original bid.
GCG reported that shareholders representing about 50% of its common shares would support the new price of C$45 per share. That group included all of aforementioned shareholders, along with Madison Avenue Partners, HughesLittle Investment Management, Newtyn Management, Sand Grove Capital Management, Hawk Ridge Capital Management, and Alpine Associates Management.
Apollo Partner Alex van Hoek expressed gratitude for the shareholder support in the new deal. He reiterated that Apollo sees significant opportunities to grow GCG and improve guest experiences. “We’re committed to providing Great Canadian with the financial and strategic flexibility to successfully manage Covid-19 challenges and accelerate future growth and innovation as the market leader in Canada,” he said.
Making It Official
Two days after announcing the new bid, Great Canadian Gaming announced the vote from that day’s virtual meeting of shareholders and optionholders. The final tally showed that 79.44% of the votes by shareholders and 80.42% of securityholders approved the deal.
At the height of the holiday season, the majority of all interested parties approved the acquisition of all issued and outstanding common shares of GCG by an affiliate of funds managed by affiliates of Apollo Global Management. And it happened at C$45.00 per share.
Bloomberg News reported that one of the top shareholders in GCG, BloombergSen (not affiliated with the news company) was pleased. Chairman Peter Meredith commented, “The increased purchase price of C$45 per share unlocks greater value for shareholders, and the company and board appreciate the support of some of Great Canadian’s largest institutional shareholders for this transaction.”
Of course, regulators in British Columbia, New Brunswick, Nova Scotia, and Ontario must approve the deal. The Supreme Court of British Columbia must issue a final approval order. GCG will complete the applications for these approvals in the coming days.
If all goes well, the deal could be finalized in the second quarter of 2021.
Support for Final Deal
At the point that the deal becomes final with all necessary regulatory and governmental approvals, GCG will delist from the Toronto Stock Exchange.
Speaking of the Toronto Stock Exchange, Great Canadian Gaming Corporation (GC.TO) stocks soared from $37.25 on December 18 to $43.68 on December 21 with regard to the revised bid. It settled at $43.41 on the last day of trading before the Christmas holiday.
Apollo Global Management (APO) on the New York Stock Exchange sat at $47.75 on the 18th and dipped to $46.46 upon the news of the higher bid. However, Apollo rose on the voting results and settled in at $49.09 just before the holiday.
As the coronavirus pandemic continues to ravage businesses across Canada, complete with a new and deadlier strain of the virus edging in, the deal will guarantee a bright future for GCG. The tough year will now end on a hopeful note with new money and confidence.