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Goldring family trying to douse sale speculation

AGF stock suggests company sale Add to ...

Toronto's Goldring family - controlling shareholder of AGF Management Ltd. - appears to be putting the kibosh on of putting the mutual fund company up for sale.

Some of that speculation was also doused by analysts on Monday after that saw Randy Ambrosie, president of the fund arm, leave the company.

There were rumours of a corporate restructuring or sale of its trust unit after AGF telegraphed that pending organizational changes were the reason for rescheduling its analyst and investor day to May 14.

But the current price of AGF's non-voting B shares is suggesting that significant changes are ahead of the company, Blackmont Capital analyst Richard McCormick said Tuesday.

"Based on consensus 2010 earnings per share, AGF is currently trading near its highest levels since January, 2008, and at a modest 7 per cent discount to IGM Financial, well below a 22 per cent average discount over the pas year," Mr. McCormick wrote in a note to clients.

"We believe the current price continues to assume either a trust value at the $3.00 per-share level or an outright sale of the company. Neither of these options seems very realistic in our mind as the trust continues to face significant pressures, and management has continually confirmed no interest in selling the firm."

The analyst said in an interview that he believes that a sale of AGF rather than the trust is more likely being priced into the stock now. In a takeout scenario, he has a target of $15 a share for AGF.

Should AGF ultimately be put on the auction block, the best bets for potential buyers appear to be a bank, Manulife Financial Corp. or Power Financial Corp. , whose IGM Financial Inc. owns a trust unit.

Among the banks, Bank of Nova Scotia seems an unlikely candidate, given it owns chunks of CI Financial Corp. and DundeeWealth Inc. The fund arms of Royal Bank , Toronto-Dominion Bank and Canadian Imperial Bank of Commerce have serious size.

Bank of Montreal , which bought Guardian Group of Funds in 2000, should be the one chomping at the bit to get bigger. All these scenarios are likely on the minds of AGF share buyers lately.

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