Mosaic Capital Corporation (M) has agreed to be acquired for C$5.50 per share in an all cash transaction.

The company entered into an arrangement with 2356340 Alberta Inc., a private company owned by an entity controlled by Fairfax Financial Holdings Limited and MCC Holdings Ltd., to be acquired for $5.50 per share or a consolidated enterprise value of $277.3 million.

Transaction highlights

  • The purchase price represents a 61.7 per cent premium to the $3.40 closing price of the common shares on the TSXV on June 25, 2021
  • Mosaic’s Board of Directors formed a special committee of non-management directors to provide oversight, guidance and specific instructions with respect to the negotiations
  • Given Mosaic’s considerable outstanding indebtedness, and an ongoing lack of investor interest in diversified small capitalization companies, the special committee does not believe that Mosaic’s limited access to the public equity markets justifies the cost of remaining a public company
  • Mosaic retains the ability to respond to unsolicited superior proposals upon payment of a $1.8 million termination fee
  • Under certain conditions, the purchaser is obligated to pay to Mosaic a reverse termination amount of $1.8 million where there is a failure to consummate the arrangement
  • Completion of the transaction is subject to approval by shareholders at a special meeting
  • The transaction is currently expected to close in early August 2021

William H. Smith, Vice Chairman of Mosaic and chair of the special committee, commented,

“After careful deliberation, we are pleased to unanimously recommend that our shareholders vote in favour of this transaction. We believe the value offered is attractive at this juncture in Mosaic’s history. Furthermore, given the unique challenges related to diversified small-cap public companies in Canada we believe that Mosaic’s underlying portfolio companies are better positioned for future success with Mosaic structured as a private company.”

Fairfax Financial Holdings is engaged in property and casualty insurance and reinsurance and the associated investment management.

MCC Holdings Ltd. is a company controlled by Mark Yusishen. Yusishen owns a number of private businesses throughout Canada and the United States.

Mosaic owns a portfolio of established businesses spanning a diverse range of industries and geographies.

Mosaic Capital Corporation (M) is up by 55.88 per cent and is currently trading at $5.30 per share as of 9:30 am ET.