Say goodbye to CSI, Canaccord accepts $1.30|
Thursday, June 17, 1999
Canaccord makes surprise
endorsement of CSI deal
VANCOUVER - In a surprising turn of events, Canaccord Capital
Corp. yesterday decided to endorse Royal Bank of Canada's
$1.30-a-share takeover offer for CSI Credit Systems International
Inc. of Burnaby, B.C.
"We think it's a fair offer, so we're going to recommend tendering to
the offer," Peter Brown, Canaccord chairman, said after getting a
report from a team of Canaccord analysts who visited CSI earlier
With Royal Bank seeking a minimum of 75% of the 14 million
shares in the offer mailed yesterday, Canaccord clients could
frustrate the takeover because they hold about a third of the shares.
John Pryde, a Canaccord broker whose clients account for most of
those shares, confirmed some of his clients are disappointed but
said he will recommend they take the bank's offer.
Christopher Harrop, chairman of Northern Securities Inc. in
Toronto, and Steve Ottridge, a Vancouver broker with Nesbitt
Burns Inc. -- each believed to represent clients holding close to one
million shares -- also said their clients are not happy with the offer.
"But I can't fight the Royal Bank and Peter Brown," Mr. Harrop
CSI is a small firm that has developed and is marketing leading edge
software for retailers using customer loyalty cards.
CSI's directors have endorsed the takeover and said in their circular
they will not solicit other takeover or merger proposals. They have
left the door open to unsolicited proposals but will have to pay the
Royal Bank a $400,000 fee if they back another bid. There are no
known other bidders.
The market clearly had expected a competing bid would emerge.
Since the offer for CSI was announced on June 4, the
Vancouver-listed shares have traded actively and often in large
blocks. On Tuesday, when 511,500 shares traded, several trades
were done at $1.31 and other blocks were offered briefly at $1.50.
Yesterday, 84,400 shares changed hands. They closed at $1.28, off
Formed in 1992, CSI appears poised to become profitable after
several years of losses because it has won software contracts with
such major retailers as Nike Canada Inc.
The directors' circular said CSI accepted Royal's offer, which is at a
modest premium to where the shares were trading, because of the
commercial risks faced by CSI "without a strategic partner, the
increase in the level of competition in the U.S. market and the need
for capital that would be required to achieve CSI's plans of
expansion into the United States."