Shares in Fibrek Inc. rose on Monday, after the pulp producer won a crucial approval from a Quebec court that could brighten the prospects for its buyout by friendly suitor Mercer International .
Fibrek is also being pursued by Resolute Forest Products , formerly known as AbitibiBowater, with a $130 million offer, which is 30 percent lower than Mercer’s. Both are cash-and-stock deal, with cash portion of about $70 million.
As part of the deal, Fibrek was to issue 32.3 million special warrants to Mercer. Resolute Forest Products, however, appealed to block the issue.
On Friday, Fibrek got the approval to sell the special warrants from the Quebec court, which overturned an earlier decision by the Bureau de décision et de révision.
“We are very pleased that Fibrek minority shareholders have been heard and that they can now benefit from a superior offer,” Fibrek CEO Pierre Gabriel Cote said in a statement.
The decision, however, left Fibrek’s largest shareholders, such as Fairfax Financial Holdings and Pabrai Investment Funds that have entered into lock-up agreements with Resolute, disgruntled
Resolute, which has 51.5 percent of Fibrek shares tendered under its offer, has extended its offer till March 19.
“If the recent Quebec court reversal is allowed to stand, it will put a chill on the M&A market in Canada as it will create confusion around whether shareholders have rights, particularly to sell their shares,” Fairfax spokesman Paul Rivett told Reuters.
Resolute, which requires 66.75 percent of Fibrek shares tendered for its deal to succeed, said it would appeal against the decision.