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Quebec supplement maker Atrium Innovations sold for $751 million

MONTREAL – Dietary supplement maker Atrium Innovations Inc. (TSX:ATB) has agreed to a takeover by a group of investors, led by European private equity firm Permira, in a deal that pegs the enterprise value of the company at about $1.1 billion, including debt.

Atrium says a company backed by Permira funds will acquire all issued and outstanding common shares of Atrium, except the 25 per cent held by the Fonds de solidarite FTQ and the Caisse de depot et placement du Quebec, at a price of $24 per share.

The cash offer of $24 per share represents a premium of 22.6 per cent to the closing price of $19.58 per share on Thursday on the Toronto Stock Exchange and a premium of some 27 per cent over the 30-day volume weighted average price of $18.90 per share on the TSX.

Atrium said in announcing the deal Friday that its head office would remain in Quebec and that it will complete the expansion of its Quebec manufacturing facility.

The Caisse said it and the FTQ negotiated an agreement to ensure Atrium’s jobs, investment and research and development remain both in Quebec and elsewhere in Canada.

The Quebec-based pension fund manager said the agreement allows them to block any sale of the company that would move the operations from Quebec for three years and then have the first right to present a purchase offer.

Atrium said its board of directors is unanimously recommending shareholders and debenture holders vote in favour of the transaction and that the Fonds and the Caisse, which each hold 12.5 per cent of the company, will collectively vote their shares in favour of the deal.

Permira is a European private equity firm that advises funds with a total committed capital of $30 billion.

The offer values Atrium’s equity at about $751 million, while the transaction represents a total enterprise value for 100 per cent of the company of $1.1 billion, including the assumption of existing debt.

Shares in Atrium closed up $4.67, or 23.85 per cent, at $24.25 Friday afternoon on the TSX.

“The Permira funds understand and have a deep respect for Atrium’s Quebec heritage, which has been a key component of the company’s historic success and will remain a highly important factor in the future,” Atrium chairman Pierre Laurin said in a release announcing the deal.

Under the deal, Atrium has a 45-day go-shop period that ends Jan. 13 during which TD Securities will solicit third-party interest in submitting a superior proposal. Permira has the right to match a superior proposal during and after the go-shop Period.

Permira is entitled to a break fee of $13.5 million if a superior proposal is solicited during the go-shop period and to a break fee of $23.1 million if such a proposal is solicited after the period has expired.

Meanwhile, Permira funds has agreed to pay Atrium a termination fee of $23.1 million if the transaction is not completed under certain circumstances.

Subject to shareholder and other approvals, the deal is expected to close in the first quarter of 2014.