Winnipeg grain and agrifood firm Parrish and Heimbecker has announced a deal to buy up the 75 per cent of flour miller Dover Industries that it doesn’t already own.
The agreement, announced Friday, would give Dover shareholders $19.25 in cash per share, worth a total of about $99 million, a premium of 39 per cent over Dover’s closing price on the TSX Dec. 4. Its shares closed at $18.75 Friday.
Dover, one of the biggest Canadian-owned flour millers in Canada, said in a release Friday that its board recommends shareholders accept Parrish and Heimbecker’s offer. A shareholders’ meeting is expected to be held in late January to vote on the deal.
But Dover also reported Friday that the estate of its late board chairman, Mona Campbell, has agreed to vote its 45 per cent stake in favour of the deal.
Campbell, who had been the chairman, president and CEO of Dover since 1955, died suddenly in June in South Carolina at age 90.
Dover noted in its release that the Campbell estate’s agreement can be cancelled if the board gets a better offer from another buyer, but also noted that backing out of the Parrish and Heimbecker deal would cost Dover a $4 million “break fee.”
Dover, based at Burlington, Ont., runs flour mills in Ontario, Nova Scotia, Saskatchewan and Quebec, as well as a paper products division and ice cream cone and plastics plant in Ontario. It sells its products into the U.S. as well as in Canada.
Dover has operated since 1940 when it merged a southwestern Ontario grain and milling firm with a Hamilton ice cream cone manufacturer.
The miller has been expansion-minded in recent years, most recently sealing a deal in August to buy Cereal Foods Canada’s milling operations in Montreal.
In early 2007 Dover bought flour mills at Saskatoon and Humboldt, Sask. from Dawn Food Products; it also bought Halton Flour Milling at Acton, Ont. in 2003.
Parrish and Heimbecker “has been a shareholder and wheat supplier of Dover for many years,” director John Heimbecker said in Dover’s release Friday. “We are thrilled at the prospect of putting these two great companies together.”
Dover had been expecting takeover bids, friendly or otherwise, since at least September, when the board of directors adopted a shareholder rights plan, commonly known in stock market circles as a “poison pill.”
A poison pill, if triggered by an unsolicited takeover bid, automatically floods the market with shares for anyone other than the unsolicited bidder, thus diluting that bidder’s stake. Dover said its rights plan was “designed to encourage the fair treatment of shareholders in connection with any takeover bid for Dover.”
The pill was also meant to buy Dover’s board time to consider any unsolicited takeover bid and to “pursue, if appropriate, other value-enhancing alternatives to allow Dover’s shareholders to receive full and fair value for Dover’s common shares.”