A Canadian Imperial Bank of Commerce location in Toronto.Deborah Baic/The Globe and Mail
A billionaire oversleeps, or so the story goes, and potential disaster is averted for a Canadian private equity firm. A finance minister says no, and two of Canada's most stumbling financial giants are not able to combine into one big mistake-prone beast.
Companies like to do deals, and sometimes the only thing that saves shareholders is a little intervention in the form of pure luck.
So here then, is a tribute to serendipity, regulatory interference and anything else that saves shareholders from overreaching executives.
Why now? Because it's almost exactly 10 years since The Globe and Mail broke the story that Manulife Financial Corp. had sought to buy Canadian Imperial Bank of Commerce. A deal was cooked up in 2002 after talks between Manulife chief executive officer Dominic D'Alessandro and CIBC head John Hunkin.
The takeover needed approval from the Canadian government, which had prohibited mergers between the big life insurers and the country's largest banks. The Liberal government of the time said no, and then-finance minister John Manley delivered the message. The talks died.
History suggests that was a very good thing.
Manulife and CIBC have gone on to record billions in writedowns in the intervening years as CIBC hit troubles in credit markets and Manulife was forced to raise heaps of capital after underestimating the effect sagging stocks and interest rates would have on the guaranteed investment products it sold.
Imagine the writedowns CIBC and Manulife could have achieved together. But thanks to Mr. Manley and the Canadian government, shareholders will never have to find out.
(As an aside, in the absurdly small world of corporate Canada, if you walk into the CIBC boardroom on meeting day, you'll find Dominic D'Alessandro and John Manley.)
Similarly, when American billionaire Sam Heyman died in 2009, Onex Corp. shareholders should have sent flowers.
It was Mr. Heyman who, if you believe the most fun version of the tale, overslept and failed to tender an expected block of shares in time to allow the takeover of Australian airline Qantas by Onex and a group of partners.
The more boring, and more likely to be true, version of events is that Mr. Heyman wanted to hang on to his shares in hopes of eking out a few more dollars from the buyout.
Either way, Mr. Heyman missed the deadline, shocking the buyers who expected his shares to come in. The takeover had to be dropped.
His tardiness likely saved Onex and its investors a huge amount of pain, as five years after the failure of the deal Qantas shares are trading at barely a quarter of the value Onex and its team were offering.
There are plenty of other entries in this tribute to the road not taken – if only because somebody missed the exit.
There is Torstar Corp. being trumped by Quebecor Inc. in the takeover battle for Sun Media, saving Torstar from doubling down massively on newspapers with a chain of tabloids just before the Internet started to undercut the business model.
And there is Magna International Inc.'s attempt to buy Opel, a European car maker, from General Motors in 2009. Magna planned to team up with a Russian bank and Opel's employees to purchase a majority stake in the company, but GM balked at the last moment and pulled the sale.
Now, Opel is the equivalent of a sporting underachiever with a huge contract who can't even be traded. Reports out of Europe Monday suggest GM may simply give Opel away to PSA Peugeot Citroën, along with some cash to help any willing taker stomach the costs. Opel is losing money and doesn't expect to stop bleeding for at least a couple years.
Magna shareholders can only thank GM's mystifying decision to hold on to Opel for their salvation.
Of course, some companies cannot be stopped by luck alone.
Manulife, blocked from buying CIBC, shortly thereafter purchased John Hancock of the U.S. for $15-billion, giving it vast new markets for guaranteed investment products. That transaction haunts the company to this day.