By Barry Critchley From Financial Post

The process by which Quebec-based Manac Inc., the country’s largest manufacturer of trailers, is being privatized was long, but the outcome will bring a smile to whose who still believe there is a role for companies which have two classes of shares.

At month end shareholders of the company — it can trace its roots back more than 50 years but has been public for only the past two — will vote on a going-private transaction.

Shareholders are being asked to support a deal in which a group of investors, mostly Quebec-based groups — including the Caisse de depôt et placement du Québec, Fonds de solidarité and Investissement Québec — want to buy the company for $10.20 a share. That buying consortium also includes the management group led by Charles Dutil as well as American Industrial Partners Capital Fund IV (Cayman) LP, a Cayman Island-based “operational-oriented” private equity firm.

The deal seems assured of success: Owners of all the multiple-voting shares have agreed to tender, as have holders of about one-third of the subordinate voting shares. To get over the line, support from two-thirds of the outstanding shares cast is required. The transaction also requires the support of the so-called majority of the minority.

The sale comes a mere two years and three days after the company closed its initial public offering, a $40 million raise garnered from the sale of 4.76 million subordinate voting shares at $8.40 each. National Bank Financial was the book-runner on a financing that was priced at the low end of the marketing range and with a smaller amount of proceeds that originally expected. At the time of the deal, two groups — the Dutil family and CMI — owned, equally, the voting securities of the company.

For investors the shares came with coattail provisions, which means they stand to receive the same benefit as the holders of the superior voting shares. Accordingly they, along with the big boys — the group that owns the multiple voting shares that each come with six votes — will get $10.20 a share.

That price represents a premium to both the trading price on March 30, the day that Manac announced its strategic review, and to its recent average trading price. It’s also at the higher end of the range ($9.27-$10.40) established in a valuation by MNP. That firm also provided a fairness opinion.

So what happened? How did a company that was public for less than two years get sold?

The circular provides lots of the background. A good starting point is last January when American Industrial Partners (CMI), an investor since July 2012, indicated it was interested in selling its stake provided the price was “fair and reasonable.”

In time the company hired a legal adviser (Stikeman Elliott), a financial adviser (Stifel Nicholas), formed a special committee and at the end of March announced a strategic review. In all contact was made with more than 100 potential acquirers, which turned into the signing of 40 “non-disclosure agreements.”

Later it emerged that CMI was considering mounting a bid that would be supported by a group of Quebec institutional investors. Initially the group offered $10.10 a share, which was later, bumped. All that awaits is the shareholder vote.

And while shareholders didn’t receive a dividend in the time Manac was public, they know, thanks to the coattails, that they were treated fairly.

IMAGE: Shareholders are being asked to support a deal in which a group of investors, mostly Quebec-based groups — including the Caisse de depôt et placement du Québec, Fonds de solidarité and Investissement Québec — want to buy the company for $10.20 a share.

For more on this story go to: http://business.financialpost.com/news/fp-street/coattails-ensure-manac-shareholders-get-treated-fairly-on-going-private-transaction