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FINWIRES

Andrew Peller To be Acquired by Fairfax

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FINWIRES Analysis

Fairfax adding a wine and craft-beverage producer fits its pattern of acquiring established consumer cash-flow businesses at value prices, while the differing per-share prices for non-voting and voting shares highlight a control premium for the Peller family's voting stock. The enterprise value materially exceeding equity value points to meaningful assumed debt, a key consideration for the deal's financing. Watch for shareholder approval and any competing bids given the dual-class structure.

Key Takeaways

  • Voting shares command premium over non-voting class
  • Enterprise value implies sizable assumed debt
  • Watch dual-class shareholder approval and rival bids

Andrew Peller Limited (ADW-A.TO and ADW-B.TO), a Canada producer and marketer of wines and craft beverage alcohol products, entered Monday into a definitive arrangement agreement that will see Fairfax Financial (FFH.TO) acquire all of its issued and outstanding Class A Non-Voting shares and Class B Voting shares for cash consideration of C$8.00 and $12.00 each respectively.

The transaction represents an aggregate fully diluted equity value of approximately $397 million and $579 million on an enterprise value basis, in each case excluding the impact of rollover shares, it said.

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