Sceptre Investment Counsel Ltd. and Fiera Capital Inc. have signed a definitive agreement to merge the two companies into a bigger money manager with $30-billion in assets.
The new investment firm will be named Fiera Sceptre and will have greater growth opportunities, the companies said in a joint statement.
Under the agreement, shareholders of Toronto-based Sceptre will exchange 14 million common shares for 14 million new class A subordinate voting shares of Fiera Sceptre, which doesn't list its shares publicly.
After the deal closes, a special payment of 60 cents a share or $8.4-million will be paid as a capital distribution to Sceptre shareholders. Meanwhile, Fiera Sceptre intends to maintain a dividend of six cents a share per quarter, which Sceptre currently pays.
In another development, Fiera minority shareholder Jean Monty, a former BCE chief executive, will acquire 833,333 class A shares of Fiera Sceptre at $6 per share for a total investment of $5-million.
Sceptre's stock gained 90 cents or 17 per cent to $6.10 in early trading Wednesday at the Toronto Stock Exchange, making its stock swap with Fiera worth about $85-million.
After the deal closes, Jean-Guy Desjardins, controlling shareholder of Montreal-based Fiera Capital, will become chairman, CEO and chief investment officer of the combined company and will be its controlling shareholder.
The transaction is expected to close in late summer.
"The two firms are an ideal fit for each other," said W. Ross Walker, chairman of the board of Sceptre. "This transaction is accretive to Sceptre's earnings and leverages the strengths of both companies to create a significant player in the investment management sector."
"Jean-Guy Desjardins' superb track record in building investment management businesses, including as founder and builder of TAL Global Asset Management, and as chief investment officer at Fiera, was a key element in our decision to partner with him. Jean-Guy's team has a proven record of growing investment management businesses and shareholder value through organic growth and acquisitions."