iA Financial Corporation has entered into a definitive agreement to acquire RF Capital Group Inc, a Canadian wealth management firm, in a transaction valued at $20.00 per common share, payable entirely in cash.
The offer represents a premium of 107% over RF Capital’s closing share price of $9.65 on the Toronto Stock Exchange as of July 25 and a 102% premium over the 30-day volume weighted average price leading up to that date.
The acquisition also includes all outstanding Cumulative 5-Year Rate Reset Preferred Shares, Series B, at $25.00 per share in cash. This price reflects a 63% premium over the 30-day average trading price for the preferred shares, in addition to accrued and unpaid dividends.
If the transaction closes before March 31, 2026, Series B shareholders will also receive a cash amount equal to dividends that would have been paid through that date.
The purchase price equates to 6.7 times RF Capital’s fully synergized EBITDA for the 12 months ending March 31, 2025, and 1.5% of assets under administration as of June 30, 2025.
iA Financial expects the deal to have a neutral effect on core earnings in the first year and to increase core earnings per share by at least $0.15 in the second year.
Transaction and integration costs are projected to total approximately $60 million before tax, with the majority incurred in the first year.
The board of directors of RF Capital, following a unanimous recommendation from a special committee of independent directors, has endorsed the transaction. The board is urging both common and Series B preferred shareholders to vote in favour of the deal at an upcoming meeting.
Richardson Financial Group Limited, which owns about 44% of RF Capital’s common shares, and company directors and senior officers have signed agreements to support and vote for the acquisition.
Independent financial advisors CIBC Capital Markets and Cormark Securities Inc have each provided verbal fairness opinions to the board and special committee, stating that the consideration to be received by shareholders is fair from a financial perspective. These opinions will be included in the management information circular to be distributed to shareholders ahead of the meeting.
The acquisition will proceed through a court-approved plan of arrangement under Ontario corporate law.
The transaction requires approval by at least two-thirds of votes cast by RF Capital’s common shareholders, and, separately, by Series B preferred shareholders.
However, the completion of the deal is not contingent on the approval of Series B preferred shareholders; if not approved, those shares will remain outstanding.
The agreement includes standard non-solicitation provisions, a “fiduciary out” clause, and a right to match in favour of iA.
If RF Capital accepts a superior proposal, a termination fee of $14.8 million would be payable to iA.
Upon closing, RF Capital intends to delist its common and, if applicable, Series B preferred shares from the TSX.
If Series B preferred shareholders approve the transaction, RF Capital will also apply to cease being a reporting issuer under Canadian securities laws.
Further details, including the rationale for the board’s recommendation and voting instructions, will be provided in the management information circular to be mailed to shareholders.
The shareholder meeting is expected to take place by Sept. 22, and the transaction is anticipated to close in the fourth quarter of 2025, subject to regulatory and shareholder approvals.
This proposed acquisition follows iA Financial’s recent purchase of Global Warranty, a company specialising in warranty services and administration for Canada’s used vehicle sector.
