CI weighs raising bid or dropping out

Clarington object of bidding war Industrial Alliance offers $15 a share

CI Financial Inc. is likely to take at least a week to consider whether to top the latest bid for Clarington Corp. by Industrial Alliance Insurance and Financial Services Inc.

Industrial Alliance increased its offer for Clarington to $ 15 a share on Friday evening, beating CI’s latest bid of $ 14.75 a share for the Toronto wealth management company.

“ We have right up until Christmas to decide what we want to do,” CI president and chief operating officer Stephen MacPhail said yesterday.

“ We’ve indicated that at $ 15.25 we’re likely to be out. At $ 15 we really need to take some time to re- evaluate our strategy,” MacPhail said, adding that CI will probably not make an announcement for at least a week.

Clarington shares closed yesterday at $ 15.07, off 1 cent, indicating that at least some market players expect a higher offer. The bid from Industrial Alliance expires Dec. 28. The Quebec City- based insurer is seeking to expand its presence in the English Canadian mutual fund market.

CI, Canada’s third- largest mutual fund operator, opened the bidding for Clarington, the 21stlargest, with an unsolicited offer of $ 13 per share in late October.

Clarington quickly accepted a friendly offer from Industrial Alliance of $14.25 per share, which CI topped with a $ 14.75 bid valued at $285 million.

In topping that offer Friday, Industrial Alliance said it has lockup agreements with shareholders owning 25.5 per cent of Clarington’s stock. CI chief executive Bill Holland said last Wednesday that “ we’re not going to fight this thing forever,” and MacPhail said that ‘‘Clarington’s refusal to deal with CI, and potential compliance issues regarding fund governance, have raised the risks in the deal to the point where I would say Clarington is at best marginally attractive to us today.”