CI Financial shares down 6 percent after Scotiabank signals sale
TORONTO (Reuters) - Shares of Canadian asset manager CI Financial (CIX.TO: Quote) fell 6 percent on Thursday, after the company's top shareholder Bank of Nova Scotia (BNS.TO: Quote) said it planned to sell off all or part of its 37 percent stake.
Scotiabank, which acquired the CI stake in 2008, said after markets closed on Wednesday it would pursue any divestitures "in one, or a series of transactions" and redeploy the capital elsewhere. The bank estimated the value of the stake at C$3.8 billion ($3.48 billion).
About 45 minutes into the session, CI shares were down C$2.18 at C$33.95 on the Toronto Stock Exchange, while Scotiabank was up 26 Canadian cents at C$67.23.
Analysts said CI's share weakness was likely due to the uncertainty over the timing and value of the potential sale, as well as the removal of expectation that Scotiabank could buy the rest of CI, which some in the market had expected.
"A sale into the market would likely be done at a significant discount," RBC Capital Markets analyst Geoffrey Kwan said in a note.
As well, a potential sale is complicated by the existence of CI's shareholder rights plan, which prohibits Scotiabank from selling more than 20 percent of CI to a single suitor unless CI approves.
(Reporting by Cameron French; Editing by Marguerita Choy)
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