TORONTO – Fairfax Financial Holdings Ltd. (TSX:FFH) plans to pay about $100 million to acquire Pethealth Inc. (TSX:PTZ), an Oakville, Ont.,-based company that provides medical insurance for dogs and cats to pet owners.
Under the deal, Fairfax has offered $2.79 per share in cash for all of the company’s common shares, as well as $2.79 in cash for its preferred shares, plus any dividends accrued but unpaid up until the day before the deal closes.
The share offer itself is a 26 per cent premium to the company’s closing stock price of $2.21 on Friday and represents a premium of about 69 per cent to the closing price of on Aug. 15, when Pethealth announced it was reviewing strategic alternatives.
Total cash consideration of approximately $100 million will be paid for Pethealth’s common and preferred shares and options, Fairfax said in a statement issued Friday after markets closed.
The Pethealth board will recommend that shareholders vote in favour of the arrangement.
However, Mark Warren, the president, chief executive officer and a director of Pethealth who owns approximately 9.7 per cent of the outstanding common shares, voted against the deal, it said.
Other shareholders, including certain directors representing about 14.5 per cent of the outstanding common shares and 40.4 of the outstanding preferred shares have agreed to vote in favour.
As well, shareholders including Burgundy Asset Management Ltd. and Richard J. Renaud, collectively representing 36.4 per cent of the outstanding common shares and 24.8 per cent of the outstanding preferred, have also agreed to vote for the arrangement.
Under certain circumstance, termination of the agreement would trigger a $3.5-million fee payable by Pethealth to Fairfax.
A shareholder meeting is expected by early November.
Fairfax is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management.
Pethealth is North America’s second-largest provider of medical insurance for dogs and cats to pet owners, operating in the United States, Canada and the United Kingdom. It also is a provider of management software to North American animal welfare organizations pet-related database management services to the North American companion animal industry.