It may be the first hostile takeover bid in Canada's business income trust sector, but Livingston International Income Fund's campaign to buy smaller customs brokerage owner PBB Global Logistics Income Fund is unfolding like pretty much any unsolicited offer.
Trustees of Fort Erie, Ont.-based PBB issued a circular yesterday predictably urging unitholders to reject the all-paper bid, unveiled Oct. 19, denouncing it as coercive, financially inadequate and unattractive from a taxation point of view.
The circular also says the bid does not reflect the value of recent acquisitions and cost-cutting initiatives by PBB -- and that superior competing offers may emerge from other parties, not named, with whom PBB and its advisers are holding discussions.
Livingston, which is based in Toronto and bills itself as Canada's largest pure customs brokerage, is offering 0.92 Livingston units for each of the 10.8 million units PBB has outstanding.
Livingston units closed on the Toronto Stock Exchange yesterday at $20.09, up 29 cents, making the proposed transaction worth $199.6-million, up from $180-million just hours before it was announced. PBB's units closed yesterday at $17.60, up 30 cents.
Livingston chief executive officer Peter Luit, argued in an interview yesterday that the offer is fair.
A number of analysts have recommended that PBB holders accept it. For example, in a note to clients yesterday, Gerry Hanochko at Genuity Capital Markets reiterated a recommendation that PBB unitholders should tender to the bid, saying "the potential synergies . . . continue to make a very compelling argument for this transaction."
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