Family company wasn’t suitable for IPO: witness

Dare Foods heiress sought options to sell her share of business, court hears

Carolyn Dare-Wilfred, one of three siblings who control the family owned Dare Foods Group snack empire, in 2014 engaged an investment bank to look at taking the company public, a court hearing was told Thursday.

Bill Farrell, executive chairman of Dare Foods, said Dare-Wilfred asked him to attend a meeting with a Toronto investment bank in July 2014. She wanted him to provide the bank with some financial information about the company, and share his thoughts on whether Dare Foods should go public. At that meeting, he explained to the bankers that he didn’t think an IPO was a good idea.

“My opinion was that Dare would not be a suitable IPO candidate for the simple reason that there’s no growth story there,” he said in response to questions from John Chapman, lawyer for DareWilfred’s brothers, Bryan and Graham Dare.

Dare-Wilfred has sued her brothers under the “oppression remedy” provision of Ontario’s Business Corporation’s Act. She wants Justice Barbara Conway of the Ontario Superior Court to order that her brothers buy out her indirect, minority stake in the company at fair market value.

In 2014, she offered to sell her 20 per cent stake in the company for $55 million, but her brothers refused, in part because in 2010, Saputo Foods Ltd. sold a 21 per cent stake in Dare for $28.5 million.

After her brothers refused her offer, Dare-Wilfred began looking for another buyer, which she was allowed to do under the shareholders agreement. In May 2014, she hired a New Zealand investment bank, Taurus Group Ltd., to help market her shares.

Farrell said the brothers then instructed him to help Dare-Wilfred and Taurus line up other possible purchasers for her stake in Serad Holdings Ltd., the company through which the three siblings own an 80 per cent stake in Dare Foods. (Serad is “Dares” spelled backwards).

Farrell said he helped set up a system under which serious potential buyers could sign non-disclosure agreements, then take a look at some of Dare Foods’ financial results.

Campbell’s Soups, United Biscuits, Kellogg, and Biscuits Leclerc were among the buyers who signed agreements and looked at the books, Farrell told court, in response to questions from DareWilfred’s lawyer, John Ormston.

In July 2014, Dare-Wilfred asked Farrell to meet with a Toronto investment bank, Mackie Research Capital Corp. Dare-Wilfred wanted the bank to look at the possibility of Dare Foods launching an IPO.

Farrell said he saw problems with this plan. Companies contemplating an IPO need to offer investors lots of growth and potential for capital gains, he explained in court. Dare Foods is a small, family owned business that competes against gigantic, multinational players.

The company is a profitable yet mature business that wouldn’t offer equity investors the degree of upside needed for a successful IPO, he said. Dare Foods considers 2016 to have been a good year because it managed to book a three per cent gain in sales, he said.

Lawyers return to court on Monday afternoon to begin closing arguments.