Toronto-based Equitable Bank agreed to acquire Saskatchewan-based Concentra Bank, which operates under the trade name Wyth Financial.
Pursuant to the acquisition, Equitable Bank entered into a share purchase agreement to buy Credit Union Central of Saskatchewan's 84% common share equity interest in Concentra, as well as support agreements with other Concentra shareholders representing a majority of the remaining 16% stake in the bank.
Together, the agreements will enable Equitable Bank to acquire 100% of Concentra for a combined premium of C$35.7 million to book value of common equity. Based on Concentra's book value at Nov. 30, 2021, this would result in a total purchase price of C$470 million, subject to customary adjustments at the time of closing, representing a 1.08x price-to-book multiple, according to a news release.
The transaction has been approved by the boards of Equitable Bank, Concentra and Credit Union Central of Saskatchewan and is expected to close in the second half of 2022. Subject to the Concentra board's approval, Equitable Bank expects the transaction under which it acquires the remaining minority interest in Concentra to occur as soon as possible following the closing of the acquisition.
Leveraging its parent company, Equitable Group Inc., Equitable Bank intends to fund the purchase price through a combination of C$200 million of new equity to be raised through a bought-deal offering of subscription receipts and the remainder from a fully committed credit facility at Equitable Group from a syndicate led by TD Securities Inc. and RBC Capital Markets. Canadian Imperial Bank of Commerce is a participant.
Equitable Group entered into an agreement with a syndicate of underwriters bookrun by TD Securities Inc. and RBC Capital Markets, and co-led by CIBC World Markets, Scotia Capital Inc. and BMO Capital Markets, for the issuance of 2,840,000 subscription receipts on a bought-deal basis. The subscription receipts will be offered at a price of C$70.50 per subscription receipt, for gross proceeds of approximately C$200 million. Equitable Group granted the underwriters an overallotment option to purchase up to an additional 426,000 subscription receipts, on the same terms and conditions as the offering, exercisable no later than 30 days after the closing of the offering.
Each subscription receipt will entitle the holder to receive 1 common share of Equitable Group upon the closing of Equitable Bank's acquisition of Credit Union Central of Saskatchewan's 84% interest in Concentra.
The subscription receipts will be offered in all provinces and territories of Canada, excluding Quebec, by way of a prospectus supplement to the base shelf prospectus of Equitable Group dated June 12, 2020. The offering is expected to close Feb. 16.
TD Securities Inc. and RBC Capital Markets are financial advisers and Bennett Jones LLP is legal adviser to Equitable Bank. Borden Ladner Gervais LLP is legal adviser to Concentra.
National Bank Financial Inc. is financial adviser and Torys LLP is acting as legal adviser to Credit Union Central of Saskatchewan. Morrison Park Advisors provided an independent fairness opinion to the board of Credit Union Central of Saskatchewan.
