Home Capital Group Inc., a Canadian mortgage lender that Berkshire Hathaway Inc. helped rescue five years ago, said it turned down an approach from an unnamed buyer because the price was too low.
Toronto-based Home Capital didn't reveal the exact amount of the offer, but it said it was more than C $28.60 a share, the maximum price on a stock buyback it recently announced. The takeover approached valued the company at C $1.2 billion $930 million The cash offer undervalues the company's shares and falls short of Home Capital's intrinsic value and future growth potential, Home Capital said in a statement. It said that the offer was subsequently terminated because of an unnamed third party's proposal to buy the company. Home Capital consulted BMO Capital Markets and TD Securities, as well as the law firm Torys LLP.
The company, which serves borrowers who can't get a mortgage from Canadian banks, nearly collapsed in 2017 after it suffered a run on deposits. Warren Buffett's Berkshire bought a nearly 20% equity stake and provided an emergency line of credit to stabilize the firm. Berkshire exited most of its stake in 2018 at a significant profit.
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