Tuesday offered a compact lesson in modern takeover politics. In Montreal, Foodtastic Inc. went public with a C$43-a-share cash offer for MTY Food Group Inc. after the restaurant franchisor’s board rejected the same price twice in October. In Edmonton, Aurora Cannabis Inc. agreed to sell to Organigram Global Inc. while Curaleaf Holdings Inc., whose hostile bid Aurora’s directors had spurned, complained that it never got a look at the books.
These are small deals by this autumn’s standards. The pattern isn’t. Over the weekend Evonik’s board rebuffed an approach from BASF, and in Milan, four heirs to the Del Vecchio fortune refused even to discuss an offer for their stakes in the family holding company, a deal backed by a reported EUR22 billion of bank financing. Boards and blockholders are saying no more often, and bidders are increasingly answering by going over their heads.
The case for saying no
Directors have good reasons to resist. Unsolicited offers tend to arrive when a company’s shares are depressed, and a board that has just finished a strategic review, as MTY’s had, can reasonably argue it knows the value of the plan better than a bidder still seeking financing. Saying no is also how boards extract higher prices. Plenty of rejected first offers end as agreed deals at better terms.
But a no should come with numbers. When a suitor offers a 32% premium, as Foodtastic did, shareholders deserve more than an assurance that the standalone plan is better. They need to see what that plan is worth, on what assumptions and by when. A dividend increase and a buyback are not a valuation.
Equal access, clear deadlines
The Aurora episode shows the other risk: selective engagement. Aurora may well have picked the better partner, and its board ran a process that produced a higher headline number. Still, granting due diligence to one bidder while refusing it to another invites exactly the fight Curaleaf is now waging, and leaves shareholders guessing whether they saw the best price available.
The better practice is simple to state. Treat credible bidders on equal terms, open the books under a standstill to anyone with committed financing, set deadlines and let the highest firm offer win, or explain in detail why the standalone path is worth more. In an M&A market flush with private capital and strategic buyers hunting for growth, boards will keep getting calls. The ones that answer with transparency rather than silence will find the market trusts their no when they say it.
