Canada's Home Capital rejects takeover offer from unnamed buyer
Aug 15 (Reuters) - Canada's Home Capital Group Inc (HCG.TO) said on Monday that its board had rejected an unsolicited takeover bid from an unnamed buyer as it undervalued the mortgage lender.
The Toronto-based company did not disclose the exact price, but said it exceeded C$28.60 per share – the maximum price it was offering its shareholders for a stock buyback it had announced earlier this month.
The company said this was the second time the buyer had made an offer and that the first one was made with a partner.
Shares of Home Capital were up nearly 4% at C$29.54 ($22.87) on Monday. As of last close, they had fallen 27% this year and were trading below book value.
Earlier this month, the company reported a drop in second-quarter profit, highlighting the turmoil in the Canadian housing market due to rising cost of mortgages.
Ultra-low borrowing costs and pandemic-related stimulus measures contributed to a more than 50% rise in average home prices in Canada over the last two years. read more
Warren Buffett's Berkshire Hathaway Inc (BRKa.N) extended a lifeline to Home Capital in 2017, buying a 20% stake and offering a C$2 billion credit line after the company's investors withdrew more than 90% of funds from its high-interest savings accounts.
($1 = 1.2919 Canadian dollars)