NEWS5 August 2009

Cossette asks investors to hold fire on Cosmos bid

M&A North America

CANADA— Marketing communications group Cossette has asked shareholders to hold fire on responding to a takeover proposal from one of the firm’s co-founders.

Former vice chairman François Duffar (pictured) is offering to acquire the company through his Cosmos Group at a price of C$4.95 per share, valuing the business at C$78m. Cosmos already holds 18.7% of the company’s outstanding shares while investor Burgundy Asset Management has agreed to sell its 11% stake to Cosmos.

Cossette has retained financial and legal advisers and formed a special committee to consider the bid. In a statement yesterday the firm said: “The committee and the board of directors recommend that the shareholders of the company defer taking any action in response to the unsolicited and non-binding proposal of Cosmos Capital until the committee and the board of directors have had an opportunity to fully review such proposal and evaluate all of the company’s strategic alternatives.”

In the mean time Cossette has moved to prevent a “creeping takeover” of the company, which it says would be “detrimental to the best interests of the shareholders and not in the best interest of the company”.

A shareholder rights plan has been enacted that would make new subordinate voting shares available to shareholders at half the prevailing market price if an acquisition offer is made “without approval of the board of directors of the company”, or if the proposal does not comply with the ‘permitted bid’ provisions of the rights plan.

Cossette provides a range of marketing and communications services, including strategic planning and research through its agencies Nucleus and Impact Research in Canada, Cossette in the US and Miles Calcraft Briginshaw Duffy in the UK.

Yesterday the group reported results for the three months ending 30 June. Gross income was down 22% to C$52m while Cossette recorded a net loss for the period of C$18.4m versus a C$2m profit last year.