TORONTO - The board of C.A. Bancorp Inc. (TSX:BKP) is urging shareholders to reject a hostile takeover bid by Maxam Acquisition Corp., saying the offer is "financially inadequate."
Maxam had proposed to buy the Toronto-based company for $1.22 per share, valuing C.A. Bancorp at $32.6 million.
After consulting financial advisers and creating a special committee to evaluate the offer, C.A.'s board said Tuesday it had concluded the Maxam offer should be rejected.
"Our board believes that Maxam's offer is financially inadequate, opportunistic, and fails to recognize the full value of C.A. Bancorp's assets and future value-creation potential," said Timothy Unwin, chairman of the company's special committee.
Unwin said the Maxam offer represented a 49.9 per cent discount to C.A.'s net asset value and added that Maxam had been buying C.A.'s shares at a price higher than its takeover offer.
"The board fails to see how the Maxam offer serves the best interests of C.A. Bancorp shareholders and strongly urges its shareholders not to tender," he said.
The company also put a shareholder rights plan into effect last week which was intended to provide more time to more time to consider the Maxam offer. Such plans are commonly referred to as a "poison pill" and introduce measures that can slow down or even fend off an unwanted takeover.
Vancouver-based Maxam has said its offer provides C.A. shareholders with "compelling value" considering the lack of trading volume for the company's stock and "the lack of growth prospects for C.A. Bancorp's business."
Maxam calls itself an alternative asset manager, which invests in and manages private equity investments and other alternative assets.
C.A. Bancorp is focused on investments in small and mid-cap companies in the industrials, infrastructure, real estate and financial services sectors.