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Morneau Sobeco acquires Shepell-fgi, plans $153-million equity financing |
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Written by Eric Shackleton, THE CANADIAN PRESS
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Monday, 12 May 2008 |
TORONTO - Pension consulting firm Morneau Sobeco Income Fund (TSX: MSI.UN) announced Monday that it has bought Shepell-fgi from Clairvest Group Inc. for $321.9 million, to be paid over two years.
Toronto-based Shepell-fgi is Canada's largest provider of employee health management and workplace training and education services. Up to $42 million of the acquisition may be received in the form of units of Morneau Sobeco at the option of Morneau Sobeco, the companies said in news releases.
Clairvest said the acquisition provides Clairvest and Clairvest Equity Partners Limited Partnership, a partnership managed by Clairvest, with a return of up to six times their combined $26.2 million investment.
The transaction is slated to close June 2 and must be approved by regulatory authorities.
Together, Morneau Sobeco and Shepell-fgi "create a dynamic organization with enhanced growth opportunities," Morneau Sobeco said.
For the twelve-month period ended March 31, the companies had combined revenue of $289.2 million, pro forma adjusted EBITDA of $60.2 million, and pro forma adjusted distributable cash of $46.7 million.
"Employers face increasing challenges in managing the health and productivity of their workforce," said William Morneau, chairman and CEO of Morneau Sobeco. "Shepell-fgi's recognized leadership in workplace health and productivity solutions will complement our firm's leadership in pensions and benefits, allowing us to serve a broader spectrum of organizations' human resource management needs."
Rod Phillips, president and CEO of Shepell-fgi added: "We are convinced that the issues facing employers today and tomorrow call for a focus on improving health and productivity. Our business will thrive by having the right people, the right offerings, the right technology, and the right approach."
After the deal closes, Morneau Sobeco and Shepell-fgi will maintain their existing leadership teams and brand identities, and will continue using their current client service models and serving their clients independently.
To finance the purchase, Morneau Sobeco has negotiated a $200 million four-year credit line with National Bank Financial Inc. and underwritten by National Bank of Canada.
Morneau Sobeco has also signed a deal with a syndicate of underwriters led by National Bank Financial Inc., BMO Capital Markets and TD Securities for a bought deal public offering.
The IPO is for 12,750,000 subscription receipts at a price of $12 per subscription receipt for gross proceeds of $153 million. It is expected to close on or about June 2 subject to the usual conditions.
Morneau Sobeco also announced Monday that it has entered into a strategic alliance with Sibson Consulting, the human resource consulting division of The Segal Co.
Morneau Sobeco said the decision will help it to "strengthen its presence in the U.S. market through alliances with firms offering complementary services."
The acquisiton, financing arrangements and alliance with Sibson Consulting were announced Monday before Morneau Sobeco released its first quarter results.
Morneau reported that net income for the three months ended March 31 was $2.8 million compared to net income of $3 million for the year-earlier period.
This represents net income per unit (basic and diluted) of 12.5 cents, down from 13.8 cents in the same period last year.
It also posted an increase in revenue of $3 million, or 8.4 per cent, to $39 million compared to $36 million for the same period of 2007.
Morneau Sobeco shares closed up 15 cents, at $12.65 on the TSX on Monday.
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