Show him the money – $846-M!

Hey there, time traveller!
This article was published 23/08/2003 (8062 days ago), so information in it may no longer be current.

SIXTEEN years ago, Marty Weinberg had a dream. Yesterday, he woke up with a deal to sell the company he founded for nearly a billion dollars.

The president and CEO of Assante Corp., the maverick Winnipeg-based financial services company perhaps best known for buying the firm owned by the real-life Jerry Maguire, orchestrated yesterday’s deal to sell the company he founded to CI Fund Management for $846 million.

“It’s the right deal at the right time. This was a great run. We’re very proud of what we built,” he said in an interview yesterday from his office at Portage and Main after finalizing negotiations through the night Thursday.

“However, I have very mixed feelings. It’s difficult to let go but I believe in order to take this to the next level, this is the right decision.”

Such a move had been widely anticipated since the firm issued a release just prior to its annual meeting in June in Toronto saying its board of directors was assessing an unsolicited takeover offer.

With ownership or control of over 24.7 million of Assante’s shares, or about 28 per cent of the total, Weinberg stands to receive $203.5 million in cash and CI shares when the deal closes later this year.

Assante’s Canadian operations consist of an investment business with $7 billion in assets under management and 1,200 financial advisers handling $17 billion in assets under administration.

Weinberg gained a reputation as a real wheeler-dealer as Assante acquired 18 Canadian financial services firms during the last eight years.

As the takeover targets dwindled, he turned his attention south of the border, acquiring another seven firms focused on servicing professional athletes and Hollywood television and movie stars.

Easily the highest profile firm under the Assante umbrella was Steinberg, Moorad & Dunn, which the company bought for $120 million in 1999. The company was led by Leigh Steinberg, the sports agent on whom the lead character of the 1996 movie Jerry Maguire is based.

Eventually, Assante was providing financial products to the likes of Hollywood personalities such as David Letterman, Tom Cruise, Michael J. Fox, Roseanne Barr and high-profile athletes such as NFL quarterback Drew Bledsoe and former Toronto Blue Jays outfielder Shawn Green.

The U.S. piece of the Assante pie is not part of the CI deal and will be spun off to existing shareholders. Weinberg, who is CEO of Assante USA, said he and his executive team will now focus all of their efforts at attempting to duplicate the success of the Canadian arm in the U.S.

“We retained the growth piece of our business in a non-listed company so we can re-execute the plan in a market 15 times the size of Canada. From that perspective, shareholders get to hang on to try this one more time,” he said.

Weinberg said the value of the U.S. arm is estimated to be in the range of $118 million to $136 million, not counting a 30 to 40 per cent premium if it were ever sold. This brings the value of the deal for shareholders to approximately $9.45 to $9.65 per share.

The Assante announcement, plus a smaller deal to acquire Synergy Asset Management for $116 million, will bring CI’s assets under management to $38.5 billion, second only to Winnipeg’s Investors Group, which manages $74.9 billion along with its Mackenzie Financial subsidiary.

Bill Holland, president and CEO of CI, said negotiations for Assante began five months ago, several months after he made public his desire to buy the company if it were for sale. He said Assante would continue to be run as a stand-alone company.

Holland said the job losses at the new company would not be “terribly meaningful.”

“They won’t be as significant as you might think… We will look to cut money management and sales and marketing costs,” he said.

Assante shareholders can choose whether to receive cash or CI shares in exchange for their holdings, or a combination of the two, up to a maximum of $168 million in cash or 42.6 million in CI shares.

Weinberg said he was looking forward to the challenge in the U.S., where the company has $1.4 billion in assets under management, several billion in assets under administration and more than 300 management and staff.

“I like being the snowplow, to go out and do something that hasn’t been done before,” he said, noting the company’s head office will remain in Winnipeg, along with other offices in New York and Los Angeles.

He said CI has provided a two-year transition period during which it will phase out the Assante name in the U.S. Weinberg said he is considering changing it to Loring Ward, or some derivative of the name originally registered by his father more than 40 years ago.

geoff.kirbyson@freepress.mb.ca