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Maple Leaf Foods (Fred Lum/Fred Lum/The Globe and Mail)
Maple Leaf Foods (Fred Lum/Fred Lum/The Globe and Mail)

Maple Leaf -- open for takeovers again Add to ...

The Maple Leaf Foods poison pill that helped to make public the simmering dispute between then-shareholder Ontario Teachers' Pension Plan and the food company has quietly been allowed to lapse.

The poison pill was put in place at the end of June, as Teachers was looking to sell a huge block of Maple Leaf stock after a long-time partnership with the McCain family to control Maple Leaf had fallen apart. Teachers at the time vowed to fight the pill, if it ever came to a vote.

But it never did. Ontario Teachers, which complained that the pill infringed its rights as a shareholder, managed to sell all its Maple Leaf stock in a series of transactions. After that, the company allowed the pill to lapse.

The pill was announced June 29 ( here's the release). Under the terms, the shareholder-rights plan would stand for six months unless shareholders voted to extend it.

It gave the company's board a way to scuttle any attempt by Teachers to sell more than 20 per cent of its stock to a single investor -- limiting one of the options potentially on the table for Teachers, which was looking to unload its 35 per cent stake.

Ontario Teachers was furious at the time, saying it would certainly vote against the pill. Neil Petfroff, head of investments at the pension fund manager, told The Globe "We are considering all other options open to us with respect to challenging the adoption of this rights plan, which prevents us from exercising our legal rights as shareholders."

Because the company never put it to a vote, the pill disappeared on Dec. 29.

The pill may never have been used or voted on, but it was the public spat over the pill that made clear just how sour the relationship between Ontario Teachers and Maple Leaf had become.

It also may have resulted in the proxy fight that Maple Leaf now faces.

In August, Ontario Teachers sold about a third of its stake to activist shareholder West Face Capital, which has since launched a push to remake the Maple Leaf board.

In November, Teachers unloaded the rest in a public offering. It was a messy and expensive exit, as Teachers was forced to take a big discount to get the deal done.

Without the pill, Teachers might have been able to sell the whole block to another strategic investor.



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