Atrium Innovations Inc. agreed to be bought by private-equity firm Permira Advisers LLP in a deal that values the Canadian maker of natural health products at about C$751 million ($707 million).
Permira will pay C$24 cash for each Atrium share, the Montreal-based company said today in a statement. Permira will own 75 percent of Atrium after the deal closes, with existing shareholders Fonds de Solidarite FTQ and Caisse de Depot et Placement du Quebec splitting the remaining 25 percent.
“We are delighted to help further develop Atrium into a branded, global leader and support its expansion in the emerging markets,” John Coyle, partner at London-based Permira, said in the statement. Funds advised by Permira have total committed capital of about C$30 billion, according to the statement.
Atrium has more than 1,300 employees and operates seven manufacturing facilities. The company’s products include Douglas Laboratories dietary supplements and Garden of Life juice powders. Atrium had net income of C$37.9 million on revenue of C$361.4 million in the first nine months of the year.
Atrium soared 23 percent to C$24.25 the close in Toronto, exceeding the price offered by Permira -- indicating investors expect a higher bid to emerge. The gain was Atrium’s biggest since the company went public April 2005. Through yesterday, the shares had gained 64 percent this year.
“Atrium’s appealing businesses could trigger other bids, especially in light of the numerous private equity firms involved in the supplements industry,” Martin Landry, an analyst at GMP Securities in Montreal, said today in a note to clients.
Landry, who has a buy rating on Atrium, recommends investors keep their shares “in anticipation of a potential higher bidder.”
Permira funds will help provide the resources for Atrium to accelerate its growth and expand globally, Pierre Fitzgibbon, chief executive officer of Atrium, said in the statement.
TD Securities, Atrium’s adviser, will be allowed to solicit offers from third parties until Jan. 13. Permira will have the right to match any superior proposal during and after the so-called “go-shop” period. Permira would receive a C$23.1 million break-up fee if Atrium received a superior offer and if its board changed its recommendation.
Permira’s offer represents a 23 percent premium to yesterday’s close of C$19.58, according to data compiled by Bloomberg. The transaction, which requires court and shareholder approval, will probably close in the first quarter of 2014, Atrium said.
Should Permira succeed with its acquisition, Atrium will keep an office in Quebec, complete the expansion of a Quebec manufacturing facility, and maintain current levels of employment, investment and research and development in the province, according to the statement.
Fonds de Solidarite is a labor-sponsored venture capital fund with net assets of C$9.3 billion, while the Caisse, which oversees C$185.9 billion, is Canada’s second-largest pension fund manager. Both investors are based in Montreal.