13th Sep 2005 13:45
Canaccord Capital Inc. to acquire Adams Harkness Financial Group, Inc. Canaccord expands global small to mid cap market niche into the United States VANCOUVER, Sept. 13 /CNW/ - Canaccord Capital Inc. ("Canaccord", CCI: TSX& AIM) today announced it has signed a definitive agreement to acquire 100% ofAdams Harkness Financial Group, Inc. ("Adams Harkness"), a privately-heldBoston, Mass. based institutional investment bank, for US$20 million. Theacquisition will create Canaccord Adams, a new brand for Canaccord's GlobalCapital Markets operations worldwide. This new group will combine the industryexpertise, services and market reach of Canaccord Capital and Adams Harknessand enhance the company's ability to serve the global small to mid cap marketniche. "We see our expansion into the US as an extension of our niche approach.Partnering with the skilled professionals at Adams Harkness creates anexciting opportunity to provide a higher level of differentiated ideas andexecution to our clients," said Paul Reynolds, Vice Chair, Head of GlobalCapital Markets, Canaccord Capital Inc. "The combined operations will enhanceCanaccord's global capabilities, expand and add balance to our sector coverageand further diversify our revenue base." "The marketplace for entrepreneurial companies has become global in scopeand opportunity," said John Adams, Chairman, Adams Harkness Financial Group,Inc. "Both Canaccord and ourselves have observed this phenomenon with keeninterest and we want to be in a position to exploit it for the benefit of ourrespective clients. We believe that we are first to market and we arecommitted to being the best. A long acquaintance with Canaccord has convincedus that we share a common culture as well as a common vision." The US$ 20 million in consideration will consist of US$8 million in cashand US$12 million in approximately 1.34 million common shares of CanaccordCapital Inc., which will come from a combination of shares acquired fromselling shareholders and issuance of treasury shares. Shares will be held inescrow until June 30, 2008, with annual releases of one-third per year,beginning on June 30, 2006. Current shareholders of Adams Harkness will retainownership of certain non-core assets. In addition, a US$10 million retention pool in Canaccord common shareshas been established to retain key Adams Harkness employees and ensure thatsenior management will continue in their roles. The retention pool involvesthe issuance of 1.12 million common shares of Canaccord Capital Inc., to bepaid after a three-year vesting period. The total number of shares to bevested is also based on achievement of certain performance levels. Therefore,the total number of common shares required for purchasing Adams Harkness andemployee retention purposes is 2.46 million. Canaccord expects this transaction to be neutral to Canaccord's fiscal2006 EPS and accretive to EPS in fiscal 2007 based on the assumptions outlinedabove. Canaccord intends to continue its normal course issuer bid. As ofAugust 30, 2005, Canaccord had a total of 45,929,368 common sharesoutstanding. The agreement is subject to regulatory approvals in Canada and the US,which are expected to take between 90 and 120 days to obtain and is subject toapproval by the shareholders of Adams Harkness and other customary closingconditions. The transaction is expected to close prior to the end of fiscalQ4/06, which ends on March 31, 2006. Acquiring Adams Harkness is consistent with Canaccord's statedacquisition policy that acquisitions will: have like minded partners and aculture that will integrate well with Canaccord's; service focused marketsthat are complementary to our existing areas of expertise; be accretive withina reasonable time frame; and, effectively invest surplus capital. Adams Harkness' original operating entity was founded in 1937 and has 165employees in Boston, New York and San Francisco. In fiscal 2004, the companyhad annual revenue of US$62 million, a loss of US$9 million and net assets ofUS$11 million. Fiscal 2004 was a transition year for Adams Harkness, involvinginternal changes, restructurings, changes in senior management and write offs,helping prepare the firm to focus on its priorities in fiscal 2005. Excludingthese items Adams Harkness would have had an operating loss of US$3 million infiscal 2004. With a strategic focus on growth companies in the technology,healthcare, consumer services and industrial & manufacturing growth sectorsand strong client relationships, Adams Harkness has built an idea-basedfranchise of independent research, innovative sales and trading execution, andfocused investment banking activity. The addition of Adams Harkness to Canaccord's existing platform willallow for enhanced revenue opportunities in M&A, corporate finance,institutional sales and trading execution. It is expected that Canaccord Adamswill create a strong base of global client offerings and will enable seamlessdistribution of products and services in three core capital markets - Canada,the US and Europe. Additionally, Canaccord Adams will build upon Canaccord'sand Adams Harkness' established focus on the small to mid cap market nicheglobally and offer clients expertise in the metals and mining, energy,technology, life sciences and diversified sectors. A presentation for the investment community with highlights of thetransaction will be available following the distribution of this release onCanaccord Capital Inc.'s web site in the investor relations section at:http://www.canaccord.com/investor/shareholder/investor_presentations.htm. The highlights will be presented by senior executives to analysts andinstitutional investors on a conference call which will include a question andanswer session. The call is scheduled for Tuesday, September 13, 2005 at8 a.m. (Pacific time); 11 a.m. (Eastern time); and 4 p.m. (UK time). Analystand institutional investors can call in via telephone at: - 416-640-4127 (within Toronto) - 1-800-814-4853 (toll-free outside of Toronto) - 00-800-0000-2288 (toll-free from the United Kingdom) The conference call may also be accessed live and will be archived on alisten-only basis via the Internet at: www.canaccord.com/investor/webcast. A replay of the conference call can be accessed after 1:00 p.m. (Easterntime) on September 13, 2005 until midnight September 27, 2005 at 416-640-1917or 1-877-289-8525 by entering passcode 21150374 followed by the number sign. ABOUT CANACCORD CAPITAL INC.: Canaccord Capital Inc. is a leading independent full service investmentdealer, publicly traded on both the Toronto Stock Exchange and the AlternativeInvestment Market (AIM), a market operated by the London Stock Exchange.Canaccord has operations in two of the principal segments of the securitiesindustry: Private Client Services and Global Capital Markets. Together, theseoperations offer a wide range of complementary investment products, brokerageservices and investment banking services to Canaccord's retail, institutionaland corporate clients. Canaccord has approximately 1,300 employees worldwidein 28 offices, this includes Investment Advisors located in 25 offices acrossCanada, and international Global Capital Markets professionals based inVancouver, Calgary, Toronto, Montrĩal and London (UK). ABOUT ADAMS HARKNESS: Adams Harkness is a privately held institutional investment bank focusedon growth companies in the technology, healthcare and consumer sectors. With afocus on research-driven investment ideas, Adams Harkness offers investmentbanking and sales and trading services to its corporate and institutionalclients. Headquartered in Boston, Mass. and with offices in New York, N.Y. andSan Francisco, Calif., Adams Harkness offers the expertise of a nationalinvestment bank with the personalized attention and long-term strategic clientrelationships of a boutique investment bank. More information is available atwww.adamsharkness.com. Adams Harkness is a member of the NASD and SIPC. This press release shall not constitute an offer to sell or solicitationof an offer to buy any securities, nor shall there be any sale of securitiesin any jurisdiction in which such offer, solicitation or sale would beunlawful prior to qualification under the securities laws of any suchjurisdiction. Any offer will only be made through a prospectus, which is apart of a proxy statement to be distributed. Caution regarding forward-looking statements This document may contain certain forward-looking statements. Thesestatements relate to future events or future performance and reflectmanagement's expectations regarding Canaccord's growth, results of operations,performance and business prospects and opportunities. These statements alsoinclude expectations relating to completion of the proposed transaction withAdams Harkness, realization of expected synergies from the transaction andother matters. Such forward-looking statements reflect management's currentbeliefs and are based on information currently available to management. Insome cases, forward-looking statements can be identified by terminology suchas "may", "will", "should", "expect", "plan", "anticipate", "believe","estimate", "predict", "potential", "continue", "target" or the negative ofthese terms or other comparable terminology. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general andspecific, and a number of factors could cause actual events or results todiffer materially from the results discussed in the forward-lookingstatements. In evaluating these statements, readers should specificallyconsider various factors, which may cause actual results to differ materiallyfrom any forward-looking statement. These factors include, but are not limitedto, market and general economic conditions, the nature of the financialservices industry, the ability to successfully integrate the operations ofAdams Harkness with the operations of Canaccord, and the risks anduncertainties detailed from time to time in Canaccord's interim and annualfinancial statements and its Annual Report and Annual Information Form filedon www.sedar.com. These forward-looking statements are made as of the date ofthis document, and Canaccord assumes no obligation to update or revise them toreflect new events or circumstances. For further information: Anthony Ostler, Senior Vice President, InvestorRelations & Communications, Phone: (604) 643-7647,Email: anthony_ostler(at)canaccord.com; London: Ben Willey, Charles Ryland,Buchanan Communications, Phone: +44 (0) 207 466 5000,Email: benw(at)buchanan.uk.com; United States: Ann Carter, Rasky BaerleinStrategic Communications, Phone: (617) 443-9933, Email: ACarter(at)rasky.com (CCI.) ENDCANACCORD CAPITAL INC.Related Shares:
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