News
August 21, 2003
TORONTO, Aug. 22 /CNW/ - CI Fund Management Inc. ("CI") and Synergy Asset Management Inc. ("Synergy") announced today that they have entered into an agreement in which CI will acquire Synergy for total consideration of approximately $116 million.
Under the purchase agreement, CI has agreed to issue 1,655,874 common shares of CI and pay $94.3 million cash for Synergy. Sun Life Financial Inc. has agreed to support the transaction by purchasing 860,652 shares of CI for approximately $10.8 million. On closing, this will maintain Sun Life's ownership interest in CI at 34%.
Synergy, which pioneered the concept of style diversification, was founded by Joseph C. Canavan, President and Chief Executive Officer, in 1997. It is one of the fastest-growing mutual fund companies in Canadian history and has assets of approximately $1.4 billion in 24 funds.
"As well as maintaining consistent performance, Synergy has had positive net sales every single month since inception, has developed a strong rapport with advisers and investors, and has successfully developed a well-recognized brand over the past five years," said William T. Holland, CI's President and Chief Executive Officer.
"Synergy is an excellent fit with CI and we plan to offer a Synergy family of funds as part of our lineup. Furthermore, Synergy's investors will enjoy the benefits of being part of CI, including a strong record of investment management success, commitment to world-class systems and technology, and competitive fund operating costs."
Mr. Holland continued, "In addition to merging our two outstanding fund families, another key reason we made this decision was that we felt Mr. Canavan has the proven leadership skills and expertise to join CI in an executive capacity, overseeing the company's distribution strategy."
"In the next two years we believe that the changes in the asset management industry will be dramatic," Mr. Canavan said. "We also believe that for the benefit of our investors, it is imperative that we position ourselves ahead of these changes so that we remain a market leader. Our objective in this transaction was to find an owner that shared our philosophy, vision and commitment to being a leader in the investment business."
Mr. Canavan continued, "Our investors are the big winners, as the combined company will produce one of strongest fund lineups in Canada - CI leads the industry with the most four and five-star ratings from Morningstar Canada and has received 13 awards for investment excellence in the last five> years, while the overall performance of Synergy's funds with respect to their indices is impressive across all standard performance time periods."
"As a founding shareholder of Synergy, we are very supportive of this transaction," said M. George Lewis, Head of Financing and Investment Products for RBC Investments and RBC Banking, and a member of Synergy's Board of Directors. "RBC will have earned a pre-tax 15% per annum return on our investment primarily as a result of the great work by the management team and employees of Synergy. In addition, CI is a significant relationship to RBC as a preferred third-party fund supplier and a valued client of our Global Services and Capital Markets business."
The acquisition of Synergy, which will be debt-free on closing and has approximately $55 million in available tax losses due to cash financing of deferred sales commissions, will be immediately accretive to CI's earnings, cash flow and EBITDA (earnings before interest, taxes, depreciation and amortization). The transaction, which is subject to regulatory approval, is expected to close in October 2003 following the required notification to unitholders of the Synergy Mutual Funds.
CI Fund Management Inc. (TSX: CIX) is an independent, Canadian-owned investment management company with approximately $35.1 billion in fee-earning assets at July 31, 2003. It has the industry's broadest selection of investment funds, including mutual funds, industry-specific funds, 100% RSP-eligible global funds, segregated funds and hedge funds. CI is on the Web at www.cifunds.com.
Preceding press release obtained from CI Fund Management at www.cifunds.com.
Berkshire Capital has reprinted this press release substantially in its entirety.
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