Banks buy into Aritzia, as major shareholder Berkshire Partners exits

TD, RBC and CIBC combine to buy nearly more than 19 million shares; Aritzia buys back shares

aritzia in manhattan - gk
Image: The Aritzia store on Fifth Avenue between 16th and 17th streets has a spacious marble stairway between levels | Glen Korstrom

There’s a share shake-up at Vancouver-based women's fashion retailer Aritzia Inc. (TSX:ATZ).

The result is that major shareholder Berkshire Partners LLC, a Boston-based private equity firm, and 8317640 Canada Inc., an entity indirectly controlled by Aritzia director Aldo Bensadoun, are selling slightly more than 19.5 million shares, for $16.90 each, to a syndicate of underwriters led by Canadian banks: CIBC Capital Markets, RBC Capital Markets and TD Securities Inc.

That transaction is valued at $329,634,500 but Aritzia is not receiving any proceeds. Instead the shares are simply changing hands.

Separately, Aritizia is buying back 6,333,653 shares from Berkshire Partners LLC for the same $16.90-per-share price, and the company plans to cancel those shares. The value of that transaction is $107,038,736.

The transactions were announced after markets closed on February 19. Aritzia shares on that day closed at $17.93. The market, however, did not like the news, and Aritzia shares on February 20 opened 8% lower at $16.50, or $0.40 below the price for the share transactions. Shares in Aritzia were trading at $16.67 mid-morning Vancouver time on February 21.

Both transactions are expected to close by March 8, and at that time Berkshire Partners will have extinguished its stake in Aritzia. Brian Hill, who is not selling any of his shares, will see his equity stake in the company rise to 23.2%, up from 22.4%. Hill's voting stake in the company will rise to 74.8%, up from 73.4%.

“The repurchase of shares from Berkshire Partners represents a compelling opportunity to deploy Aritzia’s capital in a manner that is accretive to shareholders,” said CEO Brian Hill in a release.

“These transactions mark a significant milestone after a successful 14 year-long relationship between Aritzia and Berkshire Partners. We would like to thank them for their partnership and collaboration over the years.”

gkorstrom@biv.com

@GlenKorstrom