Topic: How To Invest

Q: Hi, Pat. I recently read that Fairfax has increased its holdings in Torstar up to 40% of non-voting shares. There’s also the suggestion that Fairfax’s plan may be to take the company private. Can you enlighten me on what “taking a company private” entails? Are shareholders bought out? And if they are, at what price and how is the price determined? I appreciate your advice and I look forward to your response.

Article Excerpt

A: Fairfax Financial (symbol FFH on Toronto), now holds 40.6% of the class B non-voting shares of Torstar Corp., $1.56, symbol TS.B on Toronto (Shares outstanding: 80.8 million; Market cap: $126.9 million; Torstar insiders own 100% of the class A voting stock. Those insiders are a group of five families who hold 99% of the company’s voting shares in a voting trust that ensures the company follows the doctrines and beliefs of the Toronto Star’s founder Joseph E. Atkinson. Taking the company private would involve Fairfax making a takeover bid for the remaining class B shares, as well as all the class A shares held by the families. It would then have the right to take Torstar off the Toronto stock exchange, and so make it a private company. Alternatively, the families holding the class A shares could acquire all the class B shares, both from Fairfax and public shareholders, and then take the company private. Regardless of the party behind the takeover…

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