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TORONTO — The board of directors of Aimia Inc. recommended that shareholders reject a takeover offer from Mithaq Capital SPC because it says it undervalues the company and is not compelling.

The board said on Friday that the hostile offer does not reflect some of the potential growth opportunities that the company is pursuing and cautioned it contains some 20 conditions that must be satisfied or waived.

"The hostile offer is opportunistic and is designed to capture Aimia’s true value for Mithaq rather than paying it to all shareholders," the company said in a statement.

Mithaq, a segregated portfolio company and affiliate of Mithaq Holding Co., a family office based in Saudi Arabia, is the largest shareholder in Aimia.

It has offered $3.66 per share in cash for the stake in Aimia it does not already own. 

Aimia, which sold its flagship Aeroplan loyalty program to Air Canada in 2019 and reinvented itself as an investment holding company, announced a deal last week to raise up to $32.5 million in a private placement of shares and warrants.

It said Friday that its directors and officers, as well as the investors in the private placement, intend to reject the Mithaq offer.

Under the private placement, Aimia will issue up to 10,475,000 shares together with up to 10,475,000 share purchase warrants. Each share and accompanying warrant will be issued at $3.10 and each warrant will be exercisable at $3.70 per share. 

Assuming the private placement is fully subscribed and all the warrants are exercised, the company has said the maximum number of shares issuable under the private placement represents 24.89 per cent of Aimia's currently issued and outstanding shares on an undiluted basis. 

Mithaq, which holds about a 31 per cent stake in Aimia, has raised concerns about the financing deal.

“Shareholders are right to ask themselves why Aimia’s board would choose to sell a large stake in the company for $3.10 a share in a dilutive and unnecessary private placement instead of recommending long-suffering shareholders tender to a far superior cash offer of $3.66 a share," Mithaq said in a statement.

"This is clearly yet another instance of the self-interested Aimia board and management attempting to entrench themselves at the expense of shareholders."

This report by The Canadian Press was first published Oct. 20, 2023.

Companies in this story: (TSX:AIM)

The Canadian Press