CIBC eyes U.S. growth as PrivateBancorp deal closes

TORONTO — The Canadian Imperial Bank of Commerce is pushing ahead with its ambitions in the United States now that it has completed its $5 billion acquisition of Chicago-based PrivateBancorp Inc., focusing first on organic growth but leaving the door open to “geographic regional expansion in logical places” and potential “tuck-in acquisitions as they appear.”

CIBC’s largest acquisition to date closed Friday — after two sweetened bids — giving Canada’s fifth-biggest lender some much-coveted exposure to growth south of the border as the economy at home slows.

As CIBC integrates itself with PrivateBancorp, a commercial and private bank with a national presence but a large footprint in the Chicago area, the U.S. region will operate under a unified CIBC brand, the companies said.

“The predominant focus is organic growth,” CIBC chief executive Victor Dodig said in a phone interview from Chicago. “It doesn’t mean that we won’t look at tuck-in acquisitions as they appear. Those would likely be in the wealth management space. And growing banking inorganically, that’s something that would happen over the medium to long term.”

Larry Richman, chief executive of PrivateBancorp, who will now take on the role of group head of the U.S. region, said its focus is “marketshare growth.”

However, there may be opportunity in areas where PrivateBancorp, which operates as PrivateBank, and CIBC’s Atlantic Trust franchise, a U.S. private-wealth manager for high-net-worth clients purchased in 2014, overlap, Richman added.

“It may and likely will include some geographic regional expansion in logical places where we can leverage the client-base capabilities,” Richman said from Chicago. “Because as you see the combination in the United States where PrivateBank is and CIBC Atlantic Trust, provides some logical places for us to leverage the business lines and capabilities together.”

PrivateBank has 36 locations in the U.S., 21 of which are in the Chicago area, and others in cities including Miami, Cleveland and Kansas City. Atlantic Trust has 14 offices, including in New York, Boston and San Francisco. Both have offices in Denver, Atlanta, and Chicago.

Acquiring PrivateBancorp was “foundational” for CIBC and a key part of its long-term strategy, Dodig said. But it took two sweetened bids — which worked out to be an extra US$8.40 per share of PrivateBancorp common stock — and a few more months, as it was originally expected to close during the lender’s fiscal first quarter this year.

Asked about the additional difficulties in securing the deal for CIBC, which had the smallest international footprint among its peers, Dodig said that even with the increased cost from the original $3.8 billion overall price tag, it will still be accretive for shareholders in year three after the recent shift in the U.S. interest rate environment.

“We feel particularly good because the long-term prospects for growth now at CIBC have been secured,” he said, adding that with the acquisition, the bank is aiming to bump up the proportion of earnings generated in the U.S. from 5 per cent to 10 per cent in the short term, and to 25 per cent in the medium term.

Still, a target of 25 per cent of profits generated in the U.S. by 2024 as Dodig has previously forecast, is “very aggressive,” said James Shanahan, an analyst with Edward Jones based in St. Louis. However, with highly indebted consumers and slowing economic growth at home in Canada, those dynamics might make that goal easier to attain, he added.

“To achieve that target that target in six years, there would have to be rapid growth in the U.S.,” said Shanahan. “But the main reason why it might be achievable is the growth in the much, much larger Canadian business is in the low-single digits, potentially.”

Financial Post

aligaya@postmedia.com

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Home Capital deal was sparked by a 82-year-old Canadian banker who meet Warren Buffett years ago

By Doug Alexander

Warren Buffett’s surprise investment in Home Capital Group Inc. all started with a single email from a Canadian investment banker who first met the billionaire 23 years ago.

Don Johnson, 82, an advisory board member at Bank of Montreal’s BMO Capital Markets unit, reached out to Buffett in a June 9 email, adding a photo of the two of them to remind Berkshire Hathaway Inc.’s chairman of their past connections.

“I just brought to his attention this Home Capital opportunity,” Johnson said of his message to Buffett. “I informed him that BMO Capital Markets had been retained as one of the financial advisers to Home Capital, and so I sort of summarized the opportunity and put him in touch with the head of our financial institutions group.”

Buffett clearly listened. The investor agreed to buy Home Capital shares at a deep discount and provided a fresh credit line for the struggling Canadian mortgage company, tapping a formula he used to prop up lenders from Goldman Sachs Group Inc. to Bank of America Corp. Berkshire will buy a 38 per cent stake for about $400 million and provide a $2 billion credit line with an interest rate of 9 per cent to backstop the Toronto-based lender.

Home Capital had been seeking financial stability after facing accusations by Ontario’s securities regulator in April of misleading shareholders on mortgage fraud some two years earlier. That sent its shares tumbling, accelerated deposit withdrawals and forced the firm to seek a costly emergency loan from a pension fund. Royal Bank of Canada and Bank of Montreal had been hired by Home Capital to advise on financing and other transactions.

Best Time

Johnson remembered Buffett’s criteria that the best time to consider an investment is when no one else wants to buy — and Home Capital seemed to fit the bill. He suggested Buffett reach out to BMO Capital Markets bankers including Bradley Hardie, who heads the financial institutions group at the Toronto-based firm.

“I just opened the door, that was all,” Johnson said. “I just made the introduction and he turned it over to one of his right-hand men and they contacted Brad Hardie on the Monday, right after my email on the Friday.”

Buffett had already been showing interest in Canada in recent weeks. He spoke to Prime Minister Justin Trudeau and Finance Minister Bill Morneau at a CEO summit hosted by Microsoft Corp. in Seattle last month, and asked several questions about the Canadian economy, according to a person familiar with the discussions who asked not to be identified. Buffett’s other investments in the country include AltaLink LP, an Alberta utility. A Morneau spokesman later confirmed the meeting.

‘Strong Canadian Economy’

Morneau and Buffett “talked about the strong Canadian economy, the fundamental advantages of Canada as an investment destination, and the risks to the economy from mortgage debt, which, while real, are different than in the U.S.,” Morneau said Thursday in a statement. The investment “is proof the system is working,” he said.

Buffett didn’t immediately respond to a message seeking comment.

Alan Hibben, a Home Capital director, said Thursday in an interview at Bloomberg’s Toronto office that Berkshire’s involvement was due to “outreach” by Bank of Montreal.

“We had the company on our list for quite a while, so it wasn’t exactly inbound,” said Hibben, who’s never met Buffett. “I had requested that our advisers touch base with him to see what we could do, and they did. And he came back very, reasonably quick.”

Buffett, 86, has been leaning more in recent years on his deputy investment managers, Todd Combs and Ted Weschler. Both are former hedge fund managers and were hired in the past decade to help pick stocks at Berkshire. Each runs a stock portfolio valued at about US$10 billion. But they’ve also taken on special projects for the billionaire, vetting deals and serving as chairmen of some of Berkshire’s subsidiaries.

They’re also a cornerstone of Buffett’s succession plan at Berkshire. The billionaire — who serves as the company’s chairman, chief executive officer and head of investments — has said the deputies will one day oversee the company’s massive stock portfolio, which was valued at about US$135 billion at the end of March.

Old Connection

Johnson’s connection to Buffett began more than two decades ago, when he was working on a potential Canadian deal and crossed paths with the investor. Johnson, who once was vice chairman of investment banking for the BMO Nesbitt Burns unit, stayed in touch over the years, attending one of Berkshire Hathaway’s annual meetings and seeing him in October 2007 when Buffett was a guest speaker at a fundraising dinner for the Royal Ontario Museum.

“I also invited him to my 80th birthday party, but Paul Anka was performing and he knows Paul Anka very well,” said Johnson, who turned 82 on June 18.

Johnson said he feels great to be able to play a role in the deal, and reached out to Buffett as it was announced.

“I just sent Warren an email congratulating him on the decision,” Johnson said. “It was a great investment for Berkshire Hathaway but it was also great for all the shareholders of Home Capital and all the stakeholders.”

Not Retired

Johnson began his career in the investment industry when he joined Burns Bros. and Denton Ltd. in 1963. Over the years, he held a series of management roles and became president of Burns Fry in 1984. In 1989, he became vice chairman of investment banking for BMO Nesbitt Burns and its predecessor companies. He retired as vice chairman in 2004, but continues his involvement as a member of the advisory board of BMO Capital Markets.

“I wouldn’t say I’m retired,” Johnson said. “I’m starting to slow down. I only go to the office five days a week, the other days I work from home.”

Bloomberg.com

Berkshire/Home Capital and Fairfax/H&R provide solution with capital in hand

The early mail is positive: the equity investment by Warren Buffett’s Berkshire Hathaway in Home Capital Group, an investment that could rise to $400 million, has already been financially rewarding for the buyer.

Such is the way with so-called distress investing, the term used to define the process around companies in some financial stress being able to raise capital that helps keep them alive – even if most of the gains flow to the investor.

Indeed the mere fact that an investor – who could be new to the issuer but which has a great reputation for value – enters the picture and provides capital, and the distress situation seems to disappear.

“When you have a name like Buffett and you have a balance sheet, showing up with a solution creates incredible value for yourself overnight,” noted one banker. “And the company really doesn’t have much of a choice. It has to take the deal.”

One reason for the one-sided nature of those negotiations is that the issuer lacks leverage to negotiate. It needs a capital infusion and doesn’t have many other options given that a capital raise in the public markets would take considerable time and would have to be priced at a healthy discount. And if the buyer wants more upside by adding a derivative, then the market price is about the upper limit.

In this situation the company raises equity via a much shorter private placement. Going that route brings more safeguards: The discount is limited to 15 per cent in the case of a stock trading above $2.

Fairfax/H&R leave this sub head in

It’s not just Berkshire that’s been a distress investor: Fairfax Financial has also played that role. In late 2008, around the time of the global financial crisis, when H&R REIT needed a capital boost to finance the Bow office project in Calgary, it turned to Fairfax.

The investor purchased $200 million of five-year 11.5 per cent debentures. Fairfax was also issued five-year warrants allowing it to purchase 28.6 million units. The strike price was $7, or a slight premium to the then market price. As part of that financing package, H&R also halved its monthly distribution to 6 cents per unit – apparently a Fairfax condition.

At the time, H&R said that it was “pleased” to have Fairfax return as a “substantial investor,” adding that its “financial endorsement” and the cash retained from reducing its distributions would allow H&R “to secure construction financing for the Bow.” At the time the building was set to the largest office in Western Canada.

News of the financing was a tonic for H&R with the market price of its units then starting a long upward path. Within a year the units had doubled.

Another boost to the 1.5 million square foot project came in March 2009 when banks committed $425 million to a 3.5 year construction facility. In 2012 the project, which is home to Encana and Cenovus, was completed.

So how did Fairfax do? In early 2010 (less than 15 months later) H&R repurchased all of $200 million of debentures for $230 million. It raised the capital via two public issues both at much lower coupons.

But the home run came with the warrants. In late 2009, H&R redeemed all the warrants it had issued to Fairfax for about $187.5 million. In effect it was free money because presumably Fairfax avoided a market transaction. Instead, H&R bought them back for the difference between the market price and the strike price.

Financial Post

bcritchley@postmedia.com

On Home Capital, Warren Buffett doubles his money before he even starts

Warren Buffett is no stranger to taking advantage of dark times to turn a much-needed investment to his advantage.

The Oracle of Omaha, whose Berkshire Hathaway emerged late Wednesday as a major owner of shares in Home Capital Group Inc., as well as a primary lender, famously invested $5 billion in Goldman Sachs right after the 2008 collapse of Lehman Brothers. At that time, the world’s largest financial institutions were facing their own liquidity crisis and a very uncertain future.

Berkshire Hathaway’s five-year investment was a gamble of sorts that everything would work out, and it paid off handsomely. It provided stability to the teetering sector and, at the same time, netted Buffett an eye-popping 62 per cent return.

Though the terms of the Home Capital deal are different, there’s hope some of the hallmarks of the Goldman Sachs case — stability, market confidence, and a path forward — can be replicated, even if it comes at an upfront cost to the company.

Alan Hibben, a veteran investment banker brought in as a director of Toronto-based Home Capital in its darkest days, recognizes the power of the Buffett brand. In an interview with the Financial Post, he said the company’s board backed the Berkshire Hathaway transaction because — even above financial considerations — the mortgage lender needed a “sponsor” to take it through good times and bad.

Hibben acknowledged that securing Buffett’s participation came with a price for the Canadian company, including giving Berkshire Hathaway a stake in Home Capital of almost 20 per cent at a steep discount to a recent trading average.

The deal won’t close for a few days, but based on the $9.55 a share purchase price and Thursday’s closing share price of $19, Berkshire would already have nearly doubled its $153 million investment in Home Capital’s equity, on paper.

And there’s a pledge on the table to issue a second tranche of equity subject to shareholder approval at a vote to be held in September. It would give Berkshire Hathaway a further 24 million shares at $10.30 each, for a combined investment of around $400 million in exchange for a 38.4 per cent stake in Home Capital.

There’s no way to know where the stock will be trading in September, but, at Thursday’s close, the second tranche would net Berkshire Hathaway a further gain of more than $200 million, and a total gain of about $350 million on its $400-million investment.

Acknowledging the optics of the discount, Hibben told the Financial Post the transaction was undertaken “because the board unanimously agreed that this company needed sponsorship.”

He said it was imperative to building trust back among depositors who fled when Home Capital was hit with a regulator’s allegations of misleading disclosure. The company also needed a sponsor to backstop liquidity and capital and “just to make sure that if things all go to hell in the next couple of years that there’s someone along with us that would be helpful,” Hibben said.

The transaction does not compel Berkshire to remain invested beyond a four-month hold required by regulators for private placements, Hibben said. But he thinks the Omaha-based investment firm will remain on board based on Home Capital’s stronger outlook.

“I suspect that they’re going to be a rational economic actor. As long as the company, and the board, is doing the sort of things you need to do to build value, they will be shareholders,” he said.

Hugo Chan, chief investment officer of Kingsferry Capital Management Group Ltd., a Home Capital shareholder, said the terms of the deal are more favorable for equity holders than some of Buffett’s past investments in troubled firms, including Goldman Sachs.

“Berkshire Hathaway is investing in straight equity as opposed to very costly preferred shares with expensive preferred dividends that are bad for common equity shareholders in the long-run,” Chan said in an email, adding that he is supportive of the Omaha-based investment firm increasing its stake in Home Capital in the fall.

But other observers questioned whether other shareholders will approve the steep discount. They say the deal is vintage Buffett, who penned an op-ed in the New York Times nearly a decade ago that read, in part: “Be fearful when others are greedy, and be greedy when others are fearful.”

Not only is Berkshire Hathaway getting all the stock at a double-digit discount, its credit facility comes with an interest rate of nine per cent. That is only slightly cheaper than the previous emergency credit facility provided by the Healthcare of Ontario Pension Plan, which HOOPP’s chief executive Jim Keohane characterized as akin to distressed debtor-in-possession financing during a television interview.

What’s more, analysts say Berkshire Hathaway’s $2 billion investment is secured by more than $4 billion in collateral in the form of Home Capital mortgages.

“Clearly Buffet made the deal of the century,” said a veteran lawyer and mergers and acquisitions specialist based in Toronto.

“All you need to understand to evaluate Buffett’s play is that the company was never as unsound as the stories painted it. They have an important market share in an industry that will never go away,” he said, adding that Buffett is poised to profit in legendary fashion when conditions stabilize and markets calm down.

“His investment will be worth several times what he laid out of pocket to gain entry. That’s what he does and that’s why he is a legend.”

— with files from Armina Ligaya

Warren Buffett is not the only winner in Home Capital deal

The various and many ways in which the TSX influences how transactions are structured has been on full display this past week.

The most recent example occurred Thursday when Home Capital Group announced it had received an equity infusion from Warren Buffett that could be as much as $400 million — as well as a $2 billion credit facility from the same source.

What was noteworthy about the first equity round — a $153.2 million investment that will purchase 16.044 million shares at $9.55 a share and will be done by way of a private placement — was the steep discount to the prevailing market price. Why such a large discount?

It turns out that the TSX has strict rules on private placements — a transaction it deems as being done “without prospectus disclosure, in reliance on an exemption from the prospectus requirements under applicable securities laws” — and the associated discount.

When an issuer is thinking of using a private placement, it essentially calls the TSX and tells it about its plans and then books a price. That price is always set at a discount to the then-market price with the actual discount being a function of the trading price. For a stock trading less than 50 cents, the maximum discount is 25 per cent; for a stock trading between 51 cents and $2 the maximum discount is 20 per cent; and for a stock trading above $2 (such as Home Capital) the maximum is 15 per cent.

That’s the discount the two parties agreed to on June 13, the day Berkshire made its final proposal to Home Capital. In this case, the discount was set relative to the five-day volume-weighted average price.

As things materialized, the discount became ever larger because between the time the final proposal was made and when the deal was announced, Home Capital was busy: settling a series of allegations made by the OSC and a related class action law suit and announcing asset sales. When news of those developments occurred Home Capital’s share price jumped.

Given that Home Capital is issuing 25 per cent of its shares outstanding to Berkshire, a shareholder vote would normally be required. But Home Capital said it intends to apply to the TSX pursuant to the financial hardship provisions of the TSX Company Manual to apply for an exemption. It would be a brave decision by the TSX not to grant the exemption.

But Berkshire is prepared to make a second equity infusion and will do so if shareholders give the go-ahead. In that potential second investment — if endorsed, it would provide $246.8 million — Home Capital was able to secure a smaller discount.

Specifically, Home Capital is planning to sell shares at $10.30 a piece — an eight per cent discount to the five-day volume weighted average price ending June 13.

So who wins from Thursday’s developments?

Clearly Berkshire because of the way the market handled the news that Home Capital has received a major boost from the world’s most renowned investor. The shares jumped 27 per cent to close at $19 — about double what Berkshire agreed to pay for the initial investment.

And Berkshire wins at the expense of other shareholders because their gains aren’t as strong as Berkshire’s.

The company also wins because it has secured, at least, its near-term future. Whether it’s been permanently secured depends on how management performs and how well the company can regain trust and confidence.

According to Bloomberg, at least four analysts are convinced: they all upgraded their recommendation on Thursday.

Financial Post

bcritchley@postmedia.com

The real reason Warren Buffett is rescuing Home Capital

By Katia Dmitrieva and David Scanlan

Warren Buffett has become the lender of last resort for Home Capital Group Inc. The billionaire investor agreed to buy shares at a deep discount and provide a fresh credit line for the Canadian mortgage company, tapping a formula he used to prop up lenders from Goldman Sachs Group Inc. to Bank of America Corp.

Buffett’s Berkshire Hathaway Inc. will buy a 38 per cent stake for about $400 million and provide a $2 billion credit line with an interest rate of 9 per cent to backstop the embattled Toronto-based lender, Home Capital said late Wednesday in a statement. The interest on the one-year loan would net Berkshire at least $180 million if it’s fully tapped.

“While the terms of the new credit line with Berkshire Hathaway remain harsh, we believe the purpose of this loan is to motivate Home Capital’s management to bolster their own funding sources,” said Hugo Chan, chief investment officer at Kingsferry Capital in Shanghai, which owns shares in Home Capital. “This again shows Mr. Buffett’s masterful capital allocation skills,” said Chan, citing his investment motto: “be greedy when others are fearful.”

The financial backing from the billionaire investor is poised to send the stock higher Wednesday, though it comes at a cost, in keeping with his past bailouts of financial firms. Buffett has buoyed some of the biggest U.S. corporations in times of trouble, including a combined $8 billion injection to prop up Goldman Sachs and General Electric Co. when credit markets froze during the 2008 financial crisis.

Berkshire’s purchase of $5 billion of Goldman Sachs preferred stock paid Buffett’s company an annual dividend of 10 per cent, and the billionaire also got warrants he later used to get more than $2 billion of the bank’s shares in a cashless transaction.

Deal Discount

In the Home Capital deal, Buffett’s firm agreed to pay an average price of $10 a share, a 33 per cent discount to yesterday’s closing price of $14.94. Berkshire would become the largest shareholder in Home Capital, which has a market value of $959 million.

“If you have the Warren Buffett seal of approval, people will take you more seriously than if you don’t,” said Meyer Shields, an analyst with Keefe, Bruyette and Woods. “So you sort of look beyond the settlement and say, ‘OK, what matters most now is that Warren Buffett trusts this company. And that in turn, allows Warren Buffett to get much better returns on capital than maybe some other lender would have been able to.”

The $2 billion credit line is only marginally cheaper than the emergency credit provided by the Healthcare of Ontario Pension Plan, which company directors have termed as “costly.”

Under the new credit agreement, the interest rate on outstanding balances will fall to 9.5 per cent, from 10 per cent under the existing HOOPP line. The rate will drop to 9 per cent after the initial investment is completed. The standby fee on undrawn funds will dip to 1.75 per cent from the current 2.5 per cent, then fall further to 1 per cent. The credit line is for one year. Home Capital has drawn about $1.65 billion from the HOOPP loan.

The investment “is a strong vote of confidence,” in the long-term value of the business, Brenda Eprile, Home Capital’s chairwoman, said in the statement.

New Terms

The move is the latest sign of a turnaround in the 30-year-old lender after a regulator in April accused it of misleading shareholders on mortgage fraud, which sent its shares tumbling, sparked deposit withdrawals and threatened to disrupt Canada’s real estate sector. Earlier this week, Home Capital agreed to sell a portfolio of commercial mortgages to affiliates of KingSett Capital Inc. for $1.16 billion in cash.

“Home Capital’s strong assets, its ability to originate and underwrite well-performing mortgages, and its leading position in a growing market sector make this a very attractive investment,” Buffett said in the statement.

The share purchase will be done in two parts: an initial investment of $153 million for about a 20 per cent equity stake, then an additional investment of $247 million taking the stake to about 38 per cent. The second phase requires extra approvals.

Berkshire will not be granted any rights to nominate directors and has agreed to only vote shares representing 25 per cent of the company’s stock, Home Capital said.

Home Capital shares have almost tripled since bottoming in May when its troubles began to accelerate, though remain about 73 per cent down from their peak in 2014. The company last week took full responsibility over allegations the lender misled shareholders about mortgage fraud and agreed with three former executives to pay more than $30 million to reach settlements with regulators and investors. 

Buffett’s Berkshire Hathaway is wading into a tense Canadian housing market, with Toronto house prices cooling after being hit with a 15 per cent tax on foreign buyers and tighter mortgage regulations, and confidence shaken by the Home Capital drama. Meanwhile, prices are surging in Vancouver again after being sideswiped by similar policy moves. 

Bloomberg.com

PokerStars expects to hit the jackpot with expansion into India

By Sandrine Rastello

The world’s largest online poker company will soon enter the fastest-growing smartphone market.

PokerStars owner Amaya Inc. — soon to be renamed The Stars Group Inc. — plans to start services in India with a local partner by the end of this year, lured by the country’s 1.2 billion mobile users. The Montreal, Quebec-based company is aiming for at least half the Indian market, which it estimates could reach $150 million over time.

“It’s a booming country,” Chief Executive Officer Rafi Ashkenazi told reporters after an annual meeting in Montreal Wednesday, where shareholders agreed to rename the company and move its headquarters to Ontario. “We want to be there in time and we want to make sure that we are, as usual, the market leader when it comes to poker.”

The venture into India and proposed legislation that could make online poker legal in some U.S. states could help offset expected revenue loss in Australia, which Amaya will exit to comply with upcoming legal changes. While India too has a lack of legal clarity, some states have given licenses to online poker companies on classifying their products as “games of skill.”

Ashkenazi said his chief operating officer is currently in India to finalize details of the agreement with the local partner, which already has a license. He didn’t name the company. The deal will give PokerStars access to all of India except “a couple” of states, Ashkenazi added.

KPMG estimates that India’s online gaming industry will more than double to $1 billion by 2021, adding 190 million gamers with the majority on mobile devices. Amaya shares have climbed 22 per cent this year as Ashkenazi focused on paying down debt, installing a new management team and growing the casino and sports betting business.

Home Capital gets investment, new $2B credit line from Warren Buffett’s Berkshire Hathaway

Embattled mortgage lender Home Capital just got a lifeline from the Oracle of Omaha.

Berkshire Hathaway Inc., the multinational conglomerate led by renowned investor Warren Buffett, said late Wednesday evening it has agreed to indirectly acquire $400 million of the Toronto-based company’s common shares and provide a new $2-billion line of credit to its subsidiary, Home Trust.

The deal with Berkshire Hathaway gives the alternative mortgage lender a much-needed more cost-effective funding arrangement and serves a major endorsement as Home Capital recently faced a crisis of confidence amid allegations of misleading disclosure.

Berkshire Hathaway Chairman and CEO Warren Buffett

“Home Capital’s strong assets, its ability to originate and underwrite well-performing mortgages, and its leading position in a growing market sector make this a very attractive investment,” said Buffett, Berkshire’s chairman and chief executive officer in a statement.

Berkshire’s proposal was chosen by Home Capital’s board after “considering numerous alternative proposals,” the company said. The deal with Berkshire Hathaway will provide Home Capital’s shareholders with “the best available combination of transaction certainty and the potential for enhanced shareholder value,” it added.

“Berkshire’s investment in Home Capital is a strong vote of confidence in the fundamental, long-term value of our business,” said Brenda Eprile, chair of the Home Capital board of directors, in a statement.

“We are pleased to partner with such a renowned institution in a transaction that we believe will reward all our investors for their patience and loyalty by enhancing the value of Home Capital over time.”

More to come.