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Shareholder to vote against Abitibi-Consolidated's "ill-conceived" merger with Bowater
By Lisa Kerner
Charlotte, N.C., July 16 - Abitibi-Consolidated, Inc. investor Third Avenue Management LLC intends to vote against the proposed combination of Abitibi and Bowater Inc. at the annual meeting on July 26.
Third Avenue believes the merger is "ill conceived" and not in the best interests of Abitibi shareholders.
Under the companies' merger agreement, each common share of Abitibi-Consolidated will be exchanged for 0.06261 of a common share of the newly formed company, AbitibiBowater Inc. Each Bowater common share will be exchanged for 0.52 of a common share of AbitibiBowater.
"Although Abitibi would be making the larger asset contribution to the deal, Abitibi shareholders are set to receive a minority of the value of the combined company," Third Avenue's Amit Wadhwaney said in a company news release.
"Clearly, Abitibi shareholders would be better served if management were to take advantage of opportunities to improve operating performance and strengthen the balance sheet of the existing company, rather than pursuing a merger that undervalues the company."
Third Avenue also cited the combined company's staggered board that would entrench members and management, as well the need for regulatory approvals from Canada and the United States.
Third Avenue said it is not seeking and will not accept the proxies of other Abitibi shareholders. However, the investor urges other shareholders to vote their shares against the proposed merger, according to the release.
As previously reported, Third Avenue has a 12.44% stake in Abitibi.
AbitibiBowater will be based in Montreal, with regional manufacturing and sales offices in Greenville, S.C. Its stock will be listed on the New York and Toronto stock exchanges.
The July 16 issue of Special Situations incorrectly reported that Third Avenue Management LLC was not planning on becoming an active investor.
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