Potential Snag In Great Canadian Sale

Published: December 17, 2020 10:13 am EST

The impending multi-billion-dollar sale of Great Canadian Gaming Corporation announced last month may have hit a roadblock.

Numerous major investors in Great Canadian have voiced opposition against a proposed $3.3 billion sale of the corporation, which owns Standardbred racetracks Flamboro Downs and Georgian Downs in Ontario and Fraser Downs in British Columbia, to affiliates of Apollo Global Management, Inc.

CI Global Asset Management, which is the largest shareholder of Great Canadian with 14 per cent of its shares, released a statement voicing their disapproval of the arrangement on Wednesday afternoon.

Other firms accounting for Great Canadian stock voiced their disapproval, including Glass Lewis & Co., which, according to a report from Bloomberg News, said that Apollo's timing is "opportunistic" in the light of temporary casino closures across Canada throughout 2020, and that the transaction was not "in the best interests of shareholders at this time."

Institutional Shareholder Services echoed Glass Lewis' concern, stating that "The lack of a sale process heightens concerns regarding the timing of the offer, as shareholders cannot be confident they are receiving adequate value for their shares."

The opposition of major shareholders can be enough to stifle Apollo's bid, as any transaction requires approval from a two-thirds majority of existing investors in Great Canadian.

Great Canadian shares sold for as high as $45.08 on Feb. 19, 2020, but declined sharply when the coronavirus pandemic ravaged Canada the following month. The announcement of the proposed sale of the corporation to Apollo last month — quoted at $39 per share — led to a spike in the stock's value, but it remains significantly lower than in the first quarter of 2020, having opened at $36.67 a share on Thursday (Dec. 17).

In addition to three Standardbred racetracks, the Great Canadian portfolio includes Thoroughbred racetrack Hastings Racecourse in British Columbia and casino operations on the grounds of six Canadian racetracks.