Roots closes $200M IPO by way of secondary offering

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By Ted Liu

Roots Corporation (TSX: ROOT) has completed its initial public offering (IPO) by way of secondary offering, through the issuance of 16,667,000 common shares at $12 per share for gross proceeds of $200 million.

Searchlight Capital Partners, L.P., through Searchlight Capital II PV, L.P., SC II TMK, L.P. and Searchlight TMK Co-Invest Partners, L.P., and Don Michael Investments Inc., an entity indirectly controlled by Roots founders, Michael Budman and Don Green and certain of their family members, sold 13,316,482 and 3,350,518 shares respectively.

Searchlight Capital Partners and Don Michael Investments have granted underwriters an over-allotment option for additional 15% of the number of shares being offering for gross proceeds of $30 million.

Roots shares have commenced trading on the Toronto Stock Exchange (TSX). The stock opened below offering price at $11.50 and last traded at $10.03 as at Oct 25, 2017, 1:59 PM EDT, down $1.97 with 4,204,690 shares changing hands.

Following completion of the offering, Roots has 41,980,500 shares issued and outstanding or 45,254,750 shares on fully-diluted basis.

Searchlight Capital Partners continues to own 20,010,887 shares, representing approximately 47.7% of the outstanding shares or approximately 44.2% on a fully-diluted basis. Don Michael Investments owns 5,034,872 shares, representing approximately 12.0% of the outstanding shares or approximately 11.1% on a fully-diluted basis.

The offering was co-led by TD Securities Inc., Credit Suisse Securities (Canada), Inc. and BMO Capital Markets, together with Jefferies Securities, Inc., RBC Dominion Securities Inc. and Scotia Capital Inc., as joint bookrunners, and CIBC World Markets Inc., Canaccord Genuity Corp. and National Bank Financial Inc., as underwriters.

Torys LLP and Osler, Hoskin & Harcourt LLP acted as legal counsels to Roots and the underwriters respectively.

photo credit: Roots