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Home Capital Group Inc. rejected two previous takeover bids from billionaire financier Stephen Smith before ultimately settling on the current deal, valued at the same amount per share as Mr. Smith’s original offer.

Smith Financial Corp., which is acquiring the alternative mortgage lender for $1.7-billion, or $44 a share, made two prior attempts to scoop up Home Capital. Each time, the company rejected the bids on the belief it was worth more, even as rising interest rates roiled the mortgage lending market.

Company filings released on Tuesday detail the months-long negotiations and repeated offers from Smith Financial that Home Capital turned down, even as the lender launched a large share buyback plan that would result in its shareholders selling stock at well below the deal price.

Home Capital, which had recovered from near collapse in 2017 when investor Warren Buffett rescued it, had a tumultuous year in 2022 as it whirled through three sets of takeover negotiations. Before its deal with Smith Financial was announced in November, Home Capital’s share price had plunged 17 per cent in the six months since it released worse-than-expected first-quarter results, which marked the initial blow of a cooling housing market tempered by rising interest rates.

Now Mr. Smith – a stalwart in Canada’s mortgage industry – is closing in on Home Capital, with the company ending a go-shop period on Dec. 30 that failed to attract other offers.

Mr. Smith’s thesis on Canada’s housing sector bucks the market bleak tone. Employment is a key metric Mr. Smith uses to evaluate the stability of the housing market, and the unemployment rate is at historic lows even as fears of a recession mount.

“The strength of these businesses is in the Canadian consumer,” Mr. Smith said in an interview Tuesday. “The market did not see that and that’s why the shares of Home Capital were in the mid-20s. So I really saw this as an opportunity.”

While the company had disclosed in August that it had rejected a takeover bid, little was known about the extensive negotiations.

In April, Home Capital received an unsolicited bid from Smith Financial and a takeover partner, who tabled a cash offer of $44 a share, a 26-per-cent premium to Home Capital’s previous closing price, according to company filings released on Tuesday.

The following month, even after its stock slumped as rising interest rates took a chunk out of earnings, Home Capital decided that the offer was too low and submitted a counterproposal for $47 a share. When it didn’t receive a response from Smith Financial a week later, the company rejected the offer.

Home Capital’s beleaguered share price failed to recover over the summer as the Bank of Canada hiked interest rates. In an attempt to bolster its stock, Home Capital launched a substantial issuer bid in August to repurchase as much as $115-million of its shares at a range of $25.20 to $28.60 a share.

Less than a week later, the lender received another unsolicited bid, this time solely from Smith Financial, at $37.50 a share. With market volatility, rising interest rates and weakening economic conditions, Smith Financial thought that the new offer should reflect the risks that had stunted Home Capital’s share price, according to company filings.

Home Capital asked Smith Financial to raise its bid above $40, but ultimately rejected the offer in mid-August when the two parties could not come to an agreement. A month later, the lender completed its share buyback with shareholders tendering only about 1.5 million shares at $28.60 each.

But Mr. Smith wasn’t done yet. On Sept. 20, Smith Financial submitted another bid, this time slightly higher, at $41 a share in cash. After a few weeks of negotiations, the firms agreed on a higher offer of $44 a share, along with a fee of about 25 cents a share for every three months of delay if the deal didn’t close before May 20.

While this price matched Smith Financial’s first offer in April, the stock’s plunge over seven months meant this bid represented a 63-per-cent premium to Home Capital’s last closing price of $27.05 on the Toronto Stock Exchange before the deal was announced on Nov. 21.

The terms also included a go-shop period that would allow the lender to seek out and pursue other offers. But it failed to garner any bids after its financial advisers, BMO Capital Markets and TD Securities, reached out to 38 potential buyers.

The deal is expected to close in mid-2023, pending shareholder and regulatory approvals.