Topic: How To Invest

The Successful Investor Hotline – Friday, January 6, 2023

Article Excerpt

HOME CAPITAL GROUP INC., $42.48, Toronto symbol HCG, is still a hold. The company is a mortgage lender serving borrowers who fail to meet the stricter standards of Canada’s big banks and other larger, traditional lenders. Home Capital recently accepted a friendly takeover offer of $44.00 a share from Smith Financial Corp. (SFC), a company controlled by Stephen Smith. Under the terms of the deal, the company had until December 30, 2022 to seek out a better offer. However, it did not receive a superior bid. The takeover requires the approval of two-thirds of Home Capital’s shareholders. SFC, which already owns 9.1% of the company’s shares, aims to complete the purchase by mid-2023. SFC has significant investments in other alternative lenders, such as Equitable Bank, so it may have to sell some of those holdings to win regulatory approval for the Home Capital purchase. If it is unable to complete the transaction, it will pay $60 million breakup fee to Home Capital. Moreover, SFC will increase…