News

Ending more than three months of upheaval, Cossette Inc. KOS-T has agreed to be taken acquired by Mill Road Capital LP a small Greenwich, Conn. investment firm, in an all-cash deal that values the advertising and communications services company at $131.5-million.

The Mill Road offer of $7.87 per share represents approximately a 40 per cent premium to the recent average trading price and a 50 per cent premium over an offer led by Cosmos Capital Inc., which is controlled by the former Cossette vice-chairman and president François Duffar.

Mill Road would delist the shares and take Cossette private if the deal goes through as planned. The private equity firm, which pitches itself as a Berkshire Hathaway for small companies, has significant investments in U.S. restaurant chains and nutritional companies, as well as manufacturing, business services, and consumer products. Mill Road says it also has interests in other private communications companies.

Cossette's shares soared 33 per cent after the deal was announced.

In a statement, Claude Lessard, Cossette's chairman, chief executive officer, and president said, “We are very pleased with this transaction for many reasons: it better reflects Cossette's true value and exemplifies our commitment to maximize value for all our shareholders.”

He added that Mill Road is, “a strategic partner that has already proven its respect for our organization, our brand and our people, and it ensures total continuity with our trusted clients who have supported us throughout this process. This transaction is fully supported by the senior management team.”

The bid by Mr. Duffar, who had been with Cossette for 35 years before he left the firm in May, was initially friendly before turning hostile. Cosmos offered $5.25 per share on Oct. 30.

Thomas Lynch, Mill Road's senior managing director, said in a statement, “Cossette is an outstanding brand in the communications sector and a great company. We are very pleased to partner with the management team who has our full support in deploying their strategic plan.”

Cossette has approximately 1,485 employees, down from more than 1,600 before the recession, and offices in Quebec City, Montreal, Toronto, Vancouver, Halifax, New York, Irvine, Los Angeles, London and Shanghai.

The advertising agency's clients include McDonald's Restaurants of Canada, Bell Canada, General Motors of Canada and Coca-Cola.

Cossette said it will continue to be led by Mr. Lessard and its current senior management team. Senior management shareholders, who control about 30 per cent, have agreed to support the Mill Road offer, which is expected to close before the end of 2009.

With files from Reuters