The management group of Canada’s Canaccord Genuity Group is planning a C$1.13bn ($845m) buyout bid for the firm, capitalising on the slump in its stock price amid market volatility.  

This group currently owns around 21.3% of the wealth manager.

It includes president and CEO Daniel Daviau, chairman David Kassie, all global operating committee members and certain other employees.

The group’s offer of C$11.25 a share marks a 31% premium to the stock’s last close of C$8.61 and a 41.9% premium to the volume-weighted average from the last 20 days.

Canaccord’s board has set up a special committee of independent directors to assess the offer and plans to fully respond in “due course”.

This bid to take the firm private is supported by its largest independent shareholder.

Canaccord’s management believes that the public markets put a “low value” on the business. 

“The geographically diverse business has proven to provide excellent advantages for the Company’s clients, but the Common Shares, which naturally reflect the inherent volatility of the global capital markets in which the Company operates have proven to be not well-suited for trading in a public marketplace,” Daviau noted.

The firm has lost 44% of its market cap last year, reported Reuters.

In previous talks with the management group, the special committee said it would not support the proposal of C$11.25 per share, depending on preliminary analysis.

Notably, the committee has not agreed to recommend the offer to shareholders and awaits formal valuation from Royal Bank of Canada (RBC).

“Shareholders are cautioned that there can be no assurance that the Proposed Offer or any other transaction will be completed,” the committee said.

The offer will not formally launch until the bid circular is filed and mailed.

It will be open for acceptance for at least 105 days.

Additionally, the committee will weigh alternatives, such as contacting third parties to gauge their interest in competing offers. 

However, the management group has warned of a potential “downward impact” in the event of their proposal being rejected and stated that in such a scenario, the firm’s shares would trade below the offer price.          

HPS Investment Partners, which has a stake in Canaccord’s UK wealth unit, will offer first-lien loan facility of C$825m to partially finance the bid.

Plans are also on to approach the firm’s other employees or officers to join the bidding group.

All of Canaccord’s common shares will be indirectly held by the firm and its subsidiaries’ officers and employees if the offer completes.

The firm’s underlying corporate structure, operations, executive leadership, and management are expected to remain materially unchanged.