Aimia Inc.’s AIM-T largest shareholder has abandoned its hostile attempt to acquire the former loyalty plan provider, now an investment holding company.
The shareholder, Mithaq Capital SPC, said in a statement Friday that it would not be extending its $308-million cash offer, which expired on Thursday night. Mithaq, a private investment company for one of the wealthiest non-royal families in Saudi Arabia, blamed its decision on “entrenchment and unwillingness to constructively engage” on the part of Aimia’s board of directors.
It has been nearly a year since Mithaq first squared off against Toronto-based Aimia by publicly opposing the re-election of the company’s entire board of directors ahead of its April, 2023, annual general meeting. The campaign was partly successful. Former chair David Rosenkrantz failed to win majority shareholder support, and none of the other incumbent directors received more than 52.41-per-cent support.
Typically, corporate directors are elected or re-elected with more than 90-per-cent support.
In its statement, Mithaq said it “has obtained evidence that Aimia’s then leadership inappropriately influenced the voting of proxies submitted in connection with the 2023 AGM.”
Mithaq refused to share further details, though its statement added, “Had this conduct not occurred, Mithaq believes that none of the Aimia management nominees would have been elected at the 2023 AGM.”
In response, Aimia spokesperson Joe Racanelli said the company is “pleased that the tender bid was unsuccessful” and that “shareholders should take comfort in our commitment to transparency and good governance, which will be further reflected in our upcoming quarterly reporting activities.”
Aimia transformed itself into a holding company after selling its Aeroplan loyalty program to Air Canada for $516-million in 2019. Immediately prior to Mithaq’s campaign, Aimia was effectively controlled by brothers Phil and Chris Mittleman, who were chief executive officer and chief investment officer respectively. Chris was fired in March, 2023, for allegedly engaging in what Aimia described as an “unlawful conspiracy” with Mithaq and another shareholder to take over the company.
Shortly after settling a dramatic legal battle, during which Chris accused his younger brother of committing acts of “oppression, fraud” and “retribution” against him, Phil abruptly departed the company last month. Mike Lehmann, Phil’s former prep-school roommate, who was hired as Aimia’s president shortly after Phil became CEO in 2020, also left the company at that time.
Aimia has hired an executive recruiter to find a new “operations-focused” CEO, the company said in a statement announcing the departure of Mr. Mittleman and Mr. Lehmann. Tom Finke, a retired asset management executive based in North Carolina who joined the Aimia board of directors as chair three months ago, has been leading the company on an interim basis as executive chair.
Based in Riyadh, Mithaq is the private investment company for the Al Rajhi family – founders of the Al Rajhi Bank, the world’s largest Islamic bank by market capitalization. Its stake in Aimia grew from less than 13 per cent in early 2023 to nearly 32 per cent by October, 2023.
Aimia subsequently completed a $32.5-million private placement, which Mithaq fiercely opposed, alleging it was an “abusive defensive tactic” designed to thwart its hostile takeover bid. The move diluted Mithaq’s ownership stake to roughly 28.42 per cent of the company.
The battle is not completely over yet. Aimia alleged in a Feb. 13 regulatory filing that Mithaq had violated securities law requirements for takeover bids. The Ontario Securities Commission’s Capital Markets Tribunal is set to hold a hearing on those claims in the coming months.
Mithaq described those allegations as “stale” and vowed to refute them. Mithaq also called on Aimia to appoint an unaffiliated chair to oversee its 2024 annual meeting and an independent, unaffiliated organization to scrutinize its voting results, in order to “avoid the costs, wasted resources and stain on shareholder democracy that followed the 2023 AGM.”
Aimia has yet to set a date for its 2024 AGM, and in the meantime Mithaq has another target in its sights.
As first reported by Semafor on Wednesday, Mithaq has spent at least US$80-million over the past week acquiring a majority stake in New Jersey-based The Children’s Place Inc., which operates more than 500 retail stores across North America under the “Gymboree,” “Sugar & Jade” and “PJ Place” brands, in addition to its namesake brand.
Jameson Berkow