Major Investors Challenge GDI's Proposed Privatization Deal
Two substantial shareholders in Canada's GDI Integrated Facility Services Inc. have publicly declared their intention to vote against a take-private proposal from Birch Hill Equity Partners Management and the company's chief executive. The opposition centers on concerns that the offered price significantly undervalues the facility maintenance corporation.
Shareholder Dissent Over Valuation
Gestion de Portefeuille Strategique Medici Inc., which controls 15.4 percent of GDI's subordinate voting shares, issued a formal statement criticizing the bid. The firm asserted that the offer of $36.60 per share is too low, describing it as "unfair to shareholders" and failing to reflect GDI's intrinsic value or its medium- to long-term growth prospects.
Adding to the resistance, a portfolio manager with Montrusco Bolton Investments Inc. confirmed to Bloomberg News that their firm does not plan to support the current offer. Montrusco holds approximately 13 percent of the subordinate voting shares, amplifying the challenge facing the privatization initiative.
Deal Mechanics and Additional Scrutiny
For the transaction to proceed, it must secure approval from a majority of votes cast by holders of subordinate voting stock, excluding those who intend to roll their equity into the private entity. This requirement places significant power in the hands of dissenting investors.
Another influential stakeholder, Caisse de Depot et Placement du Quebec, has indicated it is currently analyzing the takeover proposal. Their eventual position could prove pivotal in determining the bid's fate.
Background of the Controversial Offer
The takeover bid was initially announced in December by Toronto-based Birch Hill and Gestion Claude Bigras, a firm controlled by GDI's CEO. The proposal represented a 25 percent premium over the market price at the time, yet major shareholders now argue this premium is insufficient.
Medici specifically criticized the valuation framework employed by Bank of Nova Scotia, which was hired by GDI's board to conduct an independent financial analysis. The bank established a fair value range of $32.02 to $37.75 per share, but Medici contends this assessment is "overly pessimistic" because it excludes potential mergers and acquisitions activity.
Scotiabank defended its methodology in a report, explaining that each transaction possesses unique characteristics—including size, geography, timing, growth rates, profitability margins, and business risks—making direct comparisons to specific precedent transactions challenging.
The unfolding situation highlights the complex dynamics of corporate takeovers in Canada's business landscape, where shareholder approval remains a critical hurdle for any privatization effort.
