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Canada – Great Canadian board sees value in $3.3bn Apollo deal but shareholders disagree

By - 12 November 2020

A C$3.3bn deal for Apollo Global Management to buy Canadian casino group Great Canadian Gaming Corp. has been rejected by some of the casino operator’s minority shareholders.

The board though has unanimously recommended that shareholders vote in favour of the transaction in December.

Whilst the offer of $39 per share for the company has been deemed a very good price by Great Canadian’s chief executive, representatives of Bloombergsen Investment Partners, who owns 14 per cent of Great Canadian, has rejected the deal, along with minority shareholders Madison Avenue Partners and Breach Inlet Capital.

They claim Great Canadian should have looked for alternatives to the Apollo offer, despite Great Canadian’s share price increasing by 35 per cent on the Toronto Stock Exchange.

Great Canadian CEO Rod Baker said: “The Board of Directors, based on a recommendation from the special committee of independent directors, has unanimously concluded that this transaction represents the best course of action for the company. Factoring in our long-term prospects, this transaction will unlock value for our shareholders at a significant premium to our current share price.

“We are pleased that this transaction represents a great opportunity for our shareholders, while continuing to support the success of the business longer term. We believe this transaction is beneficial for our shareholders, our team members, our guests, and other stakeholders as we continue to execute on our operational and development plans into 2021 and beyond, while we navigate through this volatile time.

“In addition, we believe Apollo’s extensive experience in the gaming sector will provide additional strategic benefits to help expand our gaming and hospitality offerings and to secure our position as a long-term market leader.”

Alex van Hoek, Partner at Apollo, said: “Great Canadian is a leader in the gaming and entertainment industry and, based on our experience and knowledge of the space, we see opportunities to work with their talented team to drive additional growth and value. With an industry-leading portfolio of assets and established presence in the best geographic markets across Canada, we are excited to help bring an enhanced experience to more guests across Canada.”

“We also recognise the challenges of the current circumstances and are committed to working with the management team, regulators and health authorities to allow the company to reopen its properties as soon as it’s safe to do so. We’re excited for the company to welcome Great Canadian team members back to work, and we look forward to a time when employment and operations return to pre-COVID levels. We are of course also firmly committed to complying with applicable reopening rules as the health and safety of team members and guests will remain the highest priority.”

Great Canadian operates 25 gaming, entertainment and hospitality facilities in Ontario, British Columbia, New Brunswick and Nova Scotia. Following close of the transaction, Great Canadian will remain headquartered in Toronto, led by a Canadian management team and with Canadian board members. Apollo also anticipates that certain Canadian institutions may co-invest in the transaction to become equity owners in the Company alongside the Apollo Funds upon completion of the acquisition. Apollo is a responsible sponsor and has a long track record of success investing in companies in highly regulated industries, as well as Canada-based companies.

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