Laurentian Bank of Canada T.LB.PR.H

Let's not lose sight of the basic facts

[Investing4Life]

The Globe and Mail reported earlier this month that Laurentian Bank had received an unsolicited bid.

Then the bank announced a strategic review.

The Globe has now reported that two banks some experts thought would be bidders are not interested (BNS and TD). 

Please correct me if I am wrong, but I believe no one has reported that the initial bid has been withdrawn. The name of that bidder has not been revealed.

On Friday, Stephen Takacsy made LB a Top Pick on BNN's Market Call. He expects a takeout price of $54-60. That's not a guarantee of anything. It is, however, a clear opinion.

Earlier, the "Contra Guys" stated in the Globe that they were expecting a takeover north of $50 and possibly north of $60. Their opinon column said LB had been reporting a "reasonable profit" but was a technology laggard.

Contrary to what some believe, LB is NOT unionized. It was once. But no longer. That's not a barrier to any deal.

It has been reported that the deadline for the first round of bids is fast approaching (the end of the month).

And that's the situation.

There is no guarantee of a transaction. The interest may be "tepid", as has been reported. But on the other hand, all that's required is one bidder who is wants to buy and is willing to pay a price that is acceptable to the board. And for all we know LB already has a strong bid in hand.

Of course LB could reject any and all offers and carry on with its turnaround plan. 

While we wait to find out, LB pays a dividend of about 4.5%.

Good luck to all.

[carlocarli]

Are we sure there was a bid? As I recall, the wording of the report was quite ambiguous, some anonymous source claimed that there had been some discussions between LB and a potential buyer, but I do not recall something as definite as an unsolicited bid. I could be wrong and, if I am, I would like to be corrected.

[Investing4Life]

Fair point. It's impossible to be 100% sure of anything in these situations. The only thing that is officially confirmed is that LB has said in a news release that it is conducting a strategic review. This is what the Globe and Mail reported July 12, 2023. "Laurentian has been discussing the possibility of a deal with several suitors since late June, sources familiar with the matter

[deedee13579]

What's your definition of a rival bank in the context?  My personal opinion/guess is that it could be another bank that primarily has majority of the businesses in Quebec. Just my 2 cents.

[Investing4Life]

My two cents:  I'm not really interested in who. I want to know how much and then how many. Here's what I mean. Someone wants to buy LB. The bank hired some experts to handle a potential transacton and launched a strategic review. A bank doesn't do that without a good reason. It has been reported that there is one bid and that there have been discussions with other parties going

[deedee13579]

Well said. Thank you.

[rad10]

All valid points.  Why doesn't Laurentian just buy back as many shares as they can.  The discount to book value (if real) is substantial.   Flushing out other potential buyers is great, but still no details about the initial offer?

[Investing4Life]

I'm wondering what they will do if there isn't an acceptable bid. Maybe a big share buyback would be an option. But if LB continues with the turnaround plan, do they need to conserve capital for tech upgrades and other needs? It could be argued that the turnaround plan hasn't had a fair chance yet.  And my two cents (again) ... holding a stock that pays a decent dividend isn

[dogatcat]

Let's remember here that no bank is really out of the bidding.  Any bank can step in at ANY time.  This fictious deadline date is simply meaningless.  If Scotia or TD decided at some point to step back in, they will and Laurentian will be at the table, listening.     This is a negotiation tactic usd for centuries.  Let's see what others want to pony up

[Investing4Life]

Valid points.  There is very little transparency here. To continue with the poker analogy ... this isn't one of those televised poker shows where the audience knows who is at the table and can look at everybody's cards. It's entirely possible that a bank could be pretending to be only mildly interested (if at all) and then put down a serious offer. I could also see a scenario

[dogatcat]

In this scenario, like all things in life, money talks.   LB will wait for the right deal and it can come at anytime.  When you have the $$$$, anything is possible.     Any deal, any time.           There are no deadlines when you are a massive bank with cash reserves ready to go.  Makes TD very formindable in this regard.

[deedee13579]

I am 100% agreeing with you and I have exactly the same points on my mind ... and that's why I didn't panic sell on Friday.

[dogatcat]

I truly believe Stephen Takacsy has some information on this deal that is likely not public.  He knows the players in the finance world in Quebec.  And he rarely makes moves likes this based on pure speculation.  

[Newinvestor123]

Initially I can see a low ball offer by another bank, say low $50s then they sit back to see if other potential buyers step up to top the offer.

[dogatcat]

If the intial offer is perceived to be too low, you will see all banks perk up and have a look.   Like Takacsy , I see an offer in the mid $50s.