Bank of Nova Scotia intends to support CI Financial Corp.'s poison pill when the matter is voted on next month, but left open a small window to change its mind.
The shareholder rights plan, as it is formally known, prevents Scotiabank from selling more than 20 per cent of CI to any one party. Earlier this week the bank announced its intention to unload its position, which amounts to 37 per cent of CI.
CI's poison pill has a checkered history. In 2011, the last time it had to be approved, Scotiabank caused a fuss, leading to a war of words between the lender and CI's management team.
Because Scotiabank is such a big shareholder, and is directly affected by the pill, CI argued the lender shouldn't have the right to vote on the plan, and that only "independent" shareholders should. Initially the Toronto Stock Exchange ruled in favour of the bank, but the matter was ultimately sent to the Ontario Securities Commission, which ruled in favour of CI.
After Scotiabank lost, the lender voted against the nomination of CI's chief executive officer Stephen MacPhail and executive chairman Bill Holland during the annual meeting – mostly a symbolic move that ultimately didn't have any effect on CI's management.
With so much uncertainty around the sale of Scotiabank's stake in CI, there are new questions as to whether the pill will be a sticking point this time around. Asked to clarify its intentions, Scotiabank replied in an e-mail: "As of now we will support the renewal of the shareholder rights plan and we will examine all the [strategic] options that Goldman Sachs and Scotia Capital brings forward."
Read that quickly, and it looks like a closed case. The bank isn't looking to change the shareholder rights plan. However, Scotiabank had time to choose its words, and ultimately used the phrase "as of now." Does that mean something could change, especially if somehow a strategic buyer that wants to scoop up the whole stake emerges?