Private-equity firm Onex Corp. is buying Gluskin Sheff + Associates Inc., one of Canada’s last remaining independent wealth managers, in a $445-million deal.
The Onex offer of $14.25 a share represents a 28-per-cent premium to Friday’s closing price of $11.17, but Gluskin Sheff is agreeing to be sold at less than half its peak value of early 2014.
In Friday’s announcement, Onex chairman and chief executive Gerry Schwartz said combining Gluskin Sheff’s investing platforms in publicly traded securities with Onex’s private-equity and private-debt platforms will give clients of both firms “greater investment options.”
Gluskin Sheff CEO Jeff Moody said the two firms have “a strong cultural fit and a like-minded approach to investing and risk management.” Gluskin Sheff clients will get access to Onex alternative investment strategies, he added.
CIBC Capital Markets analyst Marco Giurleo suggests Gluskin Sheff is a firm with a couple of advantages that are owed to its high-end client base. One is that Gluskin Sheff is insulated from many of the regulatory issues around fee disclosure to retail clients, a problem creating headwinds for rival mutual fund companies. Mr. Giurleo also said Gluskin Sheff’s “high-touch service offering” makes it less susceptible to fee pressure than companies in other segments of the wealth management industry.
The firm was founded in 1984 by former real-estate analyst Ira Gluskin and one-time architect Gerald Sheff, and went public in 2006. Like many asset managers, it stumbled in the financial crisis, seeing its shares cut in value by more than two-thirds. By April 2013, the shares recovered to the $18 range, and the company, spurred by Mr. Gluskin and Mr. Sheff, was weighing offers. It ultimately decided not to sell. “The founders, the board and management have concluded that the current platform remains an excellent way to serve clients and enhance shareholder value at this time,” they said at the time.
The firm carved out a niche as money manager that catered to Canada’s wealthiest families. Mr. Gluskin and Mr. Sheff are noted patrons of the Toronto arts community. The pair spent millions in 1994 on a sponsorship and an epic bash to celebrate the Barnes Exhibition, a collection of French impressionist paintings displayed at the Art Gallery of Ontario.
Gluskin Sheff waged a public battle over retirement benefits owed to its two founders after the pair left the firm in 2010. Mr. Gluskin sought a $75-million payment, while Mr. Sheff claimed $110-million. After going through arbitration, the firm paid an $13.8-million settlement to the two executives in February, 2018.
Gluskin Sheff has been through three CEOs in as many years. Long-time executive Jeremy Freedman departed in 2016, and was replaced by former CIBC Mellon CEO Tom Macmillan, who in turn gave way a year later to Moody, the current CEO.
In recent years, Gluskin Sheff’s assets under management have gone sideways: The firm oversaw $8.7-billion at the end of 2016, compared to $8.2-billion at the end of last year.
With files from Tim Kiladze