The merged company would be led by Joe Canavan, a former CEO of Assante Wealth Management, who would join the firm and replace interim CEO James Werry after the deal closes.Kevin Van Paassen/The Globe and Mail
Two Canadian mutual fund operators have a plan to create a larger independent money manager with $3.1-billion of assets under management.
The friendly deal announced Friday would combine publicly traded Aston Hill Financial Inc. and Front Street Capital 2004, both based in Toronto.
Front Street has the smaller asset base, with $879-million of client money under management as of Aug. 31, but its shareholders would have the largest equity stake in the combined company.
Current shareholders in Front Street would end up with 46 per cent of the merged firm's equity and Aston Hill's shareholders would own 41 per cent if the deal goes through as planned.
The deal is supported by the boards of both companies, and significant shareholders, but also requires approvals from Aston Hill's debt holders.
Aston Hill debenture holders would be asked to exchange their current securities for 33.7 million common shares – about 13 per cent of total equity – and amended debt securities.
The merged company would be led by Joe Canavan, a former CEO of Assante Wealth Management, who would join the firm and replace interim CEO James Werry after the deal closes.
Canavan – himself an active venture capitalist – would invest $500,000 in common shares of the combined company and receive options to purchase 24 million common shares when the transaction closes.