As predicted CPN is going private, but at a disappointing price

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Auvila_QN_CPN_2017_08_18_CPN_Privatization

Excerpt:

Market Price (8/17/2017): $13.50; ST-Target: $18.00/share; NIV: $32/share

Terms of the Deal:

  • CPN announced that it agreed to be acquired by Energy Capital Partners (ECP), and a consortium of investors led by Access Industries and Canada Pension Plan Investment Board (together the “Buyers”) for $15.25/share in cash leading to an equity valuation of some $5.6B
  • The transaction has a 105 day “go-shop” period that ends 1 minutes past midnight of Friday, December 1, 2017
  • If CPN receives a superior bid then it may disband the current deal for a break-up fee of some $65MM, otherwise, should CPN choose to cancel the transaction, for whatever reason, then the break-up fee is $142MM.
  • The deal is expected to be consummated in 1Q2018.
  • The current management team is expected to remain in place.

Conclusion:

  • Disappointing selling price:
  • Potential alternate industry buyers:
  • Could another PE buyer offer more? Absolutely, in our opinion:
  • We believe a new bidder would emerge before December 1, 2017: Therefore, we must conclude that there ought to be another PE buyer looking at buying CPN, and we look for a competing bid to emerge before December 1, 2017, possibly in the range of some

 

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