Minority investors quick to oppose sale of Great Canadian

Investors say casino operator should have sought alternatives before going all-in with Apollo

Great Canadian Gaming Corp.’s chief executive officer faced a barrage of questions Wednesday from some of its minority shareholders who oppose the casino operator’s acceptance of a $3.3-billion takeover announced the previous evening.

Apollo Global Management Inc. has agreed to pay $39 per share for the company — a price that’s about 35 per cent above Great Canadian’s recent value but well short of what some investment managers argue it is worth.

Great Canadian CEO Rod Baker, who has led the company for about a decade, said its independent directors had done a thorough job of analyzing Apollo’s offer, but acknowledged they hadn’t approached other potential investors before unanimously recommending the deal. “This is a very, very strong offer and reflects, we think, all of the potential of the business,” Baker said.

The company runs 25 gaming, entertainment and hospitality facilities, primarily in Ontario and British Columbia, but has suspended most of its operations because of COVID-19-related public health restrictions.

Apollo said in its announcement that Great Canadian would remain headquartered in Toronto, led by a Canadian management team, but Baker said neither he nor his team has had any communications with the U.S. firm.

On Wednesday, the company reported a $49-million net loss for the three months ended Sept. 30, of which $36.5 million, or 66 cents per share, are

attributable to its common shareholders. Despite the impact of more than six months of reduced activity since the pandemic hit Canada this year, Baker said Great Canadian can operate on a reduced level without Apollo but he recommends shareholders accept its offer.

He was criticized during the call by Bloombergsen Investment Partners, a Toronto-based investment firm that owns about 14 per cent of Great Canadian’s equity.

According to financial data firm Refinitiv, Bloombergsen is one of Great Canadian’s largest minority shareholders and Great Canadian is one of Bloombersen’s largest holdings in a portfolio worth about $1.1 billion (U.S.) as of Aug. 31.

“This is a terrible and ridiculous deal,” said Sanjay Sen, president and cofounder of Bloombergsen.

With no majority or controlling shareholder, Bloombergsen wouldn’t have enough votes to block the deal at a shareholder meeting to be held in December.

However, minority shareholder groups can sometimes combine forces to push for better terms or to block deals they oppose.

Representatives of two U.S.-based minority shareholders, Madison Avenue Partners and Breach Inlet Capital investors, said on the call that they would also vote against the Apollo deal.

Among other things, the investors said Great Canadian should have looked for alternatives to the Apollo offer, which was announced late Tuesday ahead of the company’s scheduled third-quarter financial report issued Wednesday.