TORONTO — Home Capital Group Inc.’s deal to be acquired by Smith Financial Corp. has cleared a significant regulatory hurdle.
The mortgage lender announced that the Commissioner of Competition has issued a "no-action letter" in respect to the deal, which values the company at $1.7 billion.
Background on the Deal
In November 2022, Smith Financial announced its intention to acquire Home Capital for $44 per share in cash. The agreement was approved by shareholders in February and remains subject to regulatory approvals under the Bank Act (Canada) and the Trust and Loan Companies Act (Canada).
Home Capital’s Operations
As a mortgage lender, Home Capital offers residential and non-residential mortgages as well as other financial services through its principal subsidiary, Home Trust Co.
The Role of Smith Financial
Smith Financial is the family holding company of Stephen Smith, who has been active in the Canadian financial space. He serves as executive chairman and co-founder of First National Finance Corp., chairman of Canada Guaranty Mortgage Insurance Co., and co-owner of Duo Bank of Canada.
Regulatory Clearance
The no-action letter issued by the Commissioner of Competition is a significant milestone in the deal’s regulatory approval process. This clearance indicates that the regulator has reviewed the proposed acquisition and determined it to be acceptable under the relevant laws and regulations.
Context and Implications
Home Capital’s takeover by Smith Financial has significant implications for the Canadian financial landscape. The acquisition will bring together two major players in the mortgage lending industry, creating a larger market share and potentially altering the competitive dynamics of the sector.
The deal is also noteworthy given the current economic climate. With interest rates rising, some experts have expressed concerns about the impact on consumers and the broader economy. The takeover by Smith Financial may be seen as an attempt to consolidate market power in preparation for potential challenges ahead.
Shareholder Approval
In February, Home Capital’s shareholders approved the acquisition deal with a 98% majority vote. This overwhelming support demonstrates confidence in the proposed transaction and its benefits for shareholders.
Future Developments
While the no-action letter from the Commissioner of Competition is a significant step forward, the deal still requires regulatory approvals under the Bank Act (Canada) and the Trust and Loan Companies Act (Canada). Home Capital’s management team will continue to work with regulators to ensure compliance with all relevant laws and regulations.
Conclusion
The clearance of this key regulatory hurdle marks an important milestone in the proposed acquisition by Smith Financial. As the deal moves forward, stakeholders can expect further developments that may impact the Canadian financial landscape.
Related Articles
- Competition watchdog reviewing Smith Financial bid for Home Capital: A recent article highlighting the ongoing review process by the Competition Bureau.
- Home Capital posts higher-than-expected provisions for bad loans: An update on the company’s performance and its response to changing market conditions.
- Billionaire Stephen Smith haggled Home Capital price down as rates rose: An analysis of the deal’s negotiation and the role of Stephen Smith in shaping its outcome.
Join the Discussion
Share your thoughts on this article by commenting below. Create an account or sign in to join the conversation and access additional articles from across Canada.
Subscribe Now
Get unlimited online access to read articles from Financial Post, National Post, and 15 news sites across Canada with one account. Subscribe now to unlock more content and support high-quality journalism.
Register/Sign In
Create an account or sign in to continue reading this article and access additional features such as email updates from your favorite authors and daily puzzles.
Read Next
- A cut in January, then a pause: What jobs data mean for Bank of Canada and interest rates: An analysis of the latest job market trends and their implications for monetary policy.
- History is foreshadowing the worst of times for markets: A commentary on the current economic climate and its potential impact on investors.
- Bundled pricing: How the best mortgage rates increasingly come with strings attached: A guide to navigating the changing landscape of mortgage lending.
