It’s about money. Or more specifically, building the market value of your company. Here are some examples of how I helped clients do that.
Future Shop, a Burnaby, B.C.-based consumer electronics store chain that grew into a major national retail chain by the late 1990s.
Although Future Shop had a national footprint, it had virtually no profile among investors, with limited trading activity, spotty analyst coverage and little business media coverage. The CEO was also reluctant to do media interviews.
Create a compelling theme and visuals for the company’s 2000 annual report tied to new digital products. Also create a media strategy to boost the company’s profile, including interviews with COO Kevin Layden. Future Shop also announced a 2-for-1 stock split and financing to boost trading activity and analyst coverage.
Future Shop generated broader media and investment coverage. It was acquired in a friendly takeover deal by U.S. electronics giant Best Buy in 2001 for $580 million or $17 a share, a 48% premium to its previous trading value.
Pacifica Papers, one of Canada’s largest newsprint and specialty groundwood papers producers, was spun off in 1998 by Vancouver-based forestry giant MacMillan Bloedel to hold its sizeable paper and newsprint assets. Pacifica subsequently went public on the Toronto Stock Exchange.
Pacifica had no national profile or history as a public company, and its CEO had little experience running a big publicly traded company. Pacifica was also burdened with older assets that required significant capital investment. It needed a compelling ‘story’ to present to a major investment conference and subsequently, in Pacifica’s corporate reports.
Build a story around Pacifica’s 3-year plan to improve margins and overall profitability through staged capital investments that removed bottlenecks and increased throughput and profits.
Pacifica was acquired for $960 million in cash and shares in 2001 by the Canadian subsidiary of Norwegian forestry giant Norske Skog. In turn, Norske Canada was acquired in 2006 by Richmond, B.C.-based Catalyst Paper, which went private in early 2017.
Dia Met Minerals, a Kelowna, B.C.-based diamond miner led by famed exploration geologist Chuck Fipke, who discovered Canada’s first major diamond deposit, known as Ekati. Australian mining giant BHP Minerals acquired a 51% stake in Ekati, while Dia Met retained 29%. Production began in October 1998.
Dia Met struggled with several challenges. Analysts and institutional investors objected to its dual-class share structure and lack of liquidity. It also lacked a clear growth plan and strong CEO. Although he was a brilliant geologist, Fipke wasn’t viewed as the right person to be the public ‘face’ of the company.
Dia Met retained me to produce a comprehensive financial market research report to illuminate the issues outlined above, and guide management’s efforts to address them. The research entailed interviews with the company’s key equity analysts, institutional investors and its senior executive team.
I presented the findings to the Dia Met board in Vancouver in March of 2000, and the report aided the board in its subsequent strategic planning. In June of 2001, Dia Met was acquired by BHP for $646 million. Ekati continues to be a major diamond producer today.
Copyright © 2017 Gary Lamphier