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Great Lakes grain handler surrenders to hostile takeover

Southern Ontario grain handler and mustard miller Thirdcoast has conceded defeat against a hostile takeover bid, after it was ordered to drop a policy that would have blocked such bids.

Winnipeg grain firm Parrish and Heimbecker, which has an all-cash offer on the table for all shares of Goderich, Ont.-based Thirdcoast at $155 per share, scored a win Wednesday at the Ontario Securities Commission, which slapped a cease-trade order on Thirdcoast’s shareholder rights plan, or "poison pill."

Thirdcoast said in a statement Thursday that its poison pill was meant to buy the company time to work on an "alternative asset transaction" to the P+H bid.

The alternate deal, with an unnamed third party, had gone so far as to be laid out in a non-binding "heads of" agreement, Thirdcoast said.

However, given the OSC’s ruling, and that P+H had by then already picked up about two-thirds of its shares, Thirdcoast said it "will no longer have any time to work on completing the transaction."

Thirdcoast on Thursday thus recommended to its shareholders that they accept P+H’s "unsolicited offer."

The "poison pill" tactic is a formal policy often set up by publicly-traded firms anticipating a takeover bid. If an unasked-for bidder builds his or her stake past a certain percentage, the targeted company automatically issues a flood of cheap new shares to other shareholders, making a takeover unattractive.

In this case, if allowed, the poison pill would have been triggered if P+H were to buy any more Thirdcoast shares or if anyone else had bought up a stake of 20 per cent or more.

P+H, before its first offer of $115 per share in March, already owned 28 per cent of Thirdcoast. Phil and Alan Heimbecker hold seats on the Thirdcoast board.

"No impediment"

"Accordingly, the rights plan is no longer an impediment to P+H taking up Thirdcoast shares tendered to the offer," P+H said in its own release Thursday.

The Winnipeg firm said it has thus taken up over 181,000 shares that were "validly deposited" to its latest offer and has now expanded its stake to 87 per cent.

P+H said Thursday it will now extend its offer to 5 p.m. ET on Thursday, July 19, for any Thirdcoast stockholders who haven’t yet tendered their shares.

Thirdcoast is the holding company for handler Southpier Terminals and for mustard processor G.S. Dunn, which has milled Prairie-grown mustard seed and processed mustard products at Hamilton since 1867.

Southpier, which began operating in 1898 as the Goderich Elevator and Transit Co., operates grain handling, processing and storage facilities at Goderich and Port Colborne, Ont.

Thirdcoast noted in June last year that its grain handling operations were coming under direct pressure from P+H’s own new grain terminal at Hamilton, which opened in the fall of 2010.

Accepting the P+H bid also halts Thirdcoast’s reported plan to ward off a takeover by selling the Goderich terminal to another buyer. P+H said last week it had applied to the Ontario Superior Court of Justice for an injunction to block any such sale.

Related stories:
P+H to boost bid for Ont. grain handler, May 29, 2012
Ont. grain handler moves to fend off P+H bid, June 27, 2012

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