Cossette board backs $131.5 million American takeover bid

The Connecticut-based private equity firm Mill Road Capital LP bests Cosmos Capital's offer by half.

After a hot pursuit, Cosmos Capital’s chances of taking control of Cossette are going up in smoke as the agency’s board has backed a $131.5 million takeover over offer from Connecticut-based private equity firm Mill Road Capital LP.

The cash deal, which sees the investment firm offering $7.87 a share for all of Cossette’s issued and outstanding subordinate voting shares, would take the agency private, delisting the shares if successfully completed. It bests Cosmos Capital’s competing bid of $5.25 a share for the company, valuing it at $87.7 million.

‘The value for shareholders [in the Mill Road deal] is significantly higher, and that was one of the key goals of the board and of the special committee,’ says Marcel Barthe, VP corporate strategy, Cossette. ‘We had said all along that the Cosmos Capital bid was very opportunistic and did not recognize the true value of Cossette.

Cosmos, which is controlled by former Cossette vice chair and president Francois Duffar and former VP Georges Morin, had made a previous offer in July of $4.95 per share, but revised it on Oct. 30th. It currently holds almost a fifth of Cossette’s stock. The deal with Mill Road not only values Cossette shares at 50% more than the revised Cosmos offer, but the investment equity firm also supports the current senior management team, who have committed to vote all of their shares in favour of the transaction.

‘In light of the circumstances, it’s the best outcome we can envisage,’ says Barthe. ‘It keeps the brand, it keeps the name, it keeps our relationship with our trusted clients and it keeps the senior management team in place.’

Mill Road’s rap sheet includes investments in retail, business services, consumer products industries and manufacturing companies. It specializes in investments in publicly traded companies valued at less than $250 million. Its deal with Cossette is set to close before the New Year, pending shareholder approval during a meeting set to occur on Dec. 18.