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Garda says proxy firms back privatization bid

Stephan Cretier, president and chief executive officer of Garda World Security Corporation in their Montreal offices.

Christinne Muschi/The Globe and Mail

Garda World Security says its proposed $1.1-billion privatization transaction has received supportive nods from proxy advisory firms ISS Proxy Advisory Services and Glass Lewis & Co.

The two firms have recommended that their clients vote at the Oct. 24 ratification vote in favour of the $12 per share cash offer from a consortium involving Garda founder Stephan Cretier and a subsidiary of private equity firm Apax Partners.

The offer price represents about a 30 per cent premium over the closing price of Garda's shares on Sept. 6, the trading date prior to the announcement of the transaction.

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ISS says the arrangement makes strategic sense and the cash payment provides shareholders with certain value.

"In light of the low termination fee ($10-million), the significant premium, the favourable market reaction and no change of control payments, a vote for this resolution is warranted," according to a news release Tuesday from Garda.

Glass Lewis added that the proposed purchase price is "within a range we consider to be favourable for shareholders and recognize that the merger value also represents a three-year high price. Based on these factors and the support of the independent board committee and the overall board, we believe the proposed transaction is in the best interests of shareholders."

Cretier welcome the support for the transaction which he said "is a win-win opportunity for everyone involved, is fair to shareholders and in the best interest of the company."

Under the proposed agreement, Crepax Acquisition — a joint venture between the Cretier Group and an Apax subsidiary — will pay $12 per share in cash for the shares they do not already hold and will assume $625 -million of net debt.

Cretier, who owns a large stake in Garda, will retain a 24 per cent stake after the transaction, while Garda directors and key executives are also rolling over their shares for a total ownership stake of 27.2 per cent.

Garda shares were unchanged at $11.95 in morning trading Tuesday on the Toronto Stock Exchange.

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