EDMONTON – Determined pharmacy tycoon Daryl Katz has launched another bid to buy the Edmonton Oilers, slightly sweetening his offer to $188 million and getting key support from founding chairman Cal Nichols.
Nichols, who revealed Thursday that he resigned earlier this week from his position as chairman of the NHL club, had been the main spokesman for the 33-member community-based Edmonton Investors Group that spurned at least three other Katz offers earlier this year.
“After serious consideration I made my own mind up that it’s acceptable to me, I think the price is very good and it allows me to achieve liquidity and make changes in my life,” Nichols said at a Thursday news conference at Rexall Place.
“With the prospects that I see, with money already committed for an arena, my heart is first with the city, it always has been, and I guess I was betting on the edge that this was likely to get done this way than another way.”
Only four months ago, Nichols had said the team was simply not for sale. “This is not about dollars, this is about Edmonton,” he said in August.
The difference, Nichols said, is this offer is simply better than the last. This offer is for shares of the company, and Nichols said it works out to about $20,600 per share.
“We’ve all got older, we’ve had a couple of deaths in the group and things do change,” Nichols said.
“Some people are desirous of passing their shares to the next generation, others simply don’t want to do that, they want to sell. All I can do is assess my position and act accordingly.”
Nichols said his wife, Edna, had a long discussion after the group asked him to commit to being chairman for another two years. He said that, combined with the prospect of having to put in more money to fund a new arena, were main factors in his decision to sell his shares.
“For me having spent 10 years doing this, I felt these were steep hills to climb and I personally was running out of gas.”
A Katz spokesman said Thursday that “a significant number” of Oilers shareholders had told him over the past six months that they intend to sell their stake.
“It was that change in the dynamic that created an opportunity for Daryl to go back and make another offer for the team,” said spokesman Josh Pekarsky.
Nichols said investors were asked after the August offer if they wanted to sell their shares. Half said they were ready and prepared to sell, he added.
Team president and CEO Pat LaForge declined to comment on the latest takeover offer, saying only: “This is a time when prepared statements are required.”
Katz, a born-and-raised Edmontonian, owns the multibillion-dollar pharmaceutical giant the Katz Group, which includes the Rexall Pharmacy chain.
Nichols said the new offer is equivalent to $190 million due to tax treatments and capital components. The previous offer in July was said to be worth US$185 million, but Nichols had said that the price was more like $136 million once capital adjustments and tax implications were factored in.
“For me as a shareholder it’s much easier to understand and it’s more tangible than what we were dealing with before,” Nichols said.
“At the end of the day, people in this city and hockey fans and Oiler fans really care … not about who owns the team so much as they do about having competitive and entertaining hockey and a team that’s got a chance to win.
“In my opinion this offer today and the changes that might come about have little or nothing to do about what could or may not happen on the ice.”
Katz said Thursday he would also commit $100 million to a new arena. He also said he wanted Nichols to stay on with the team, representing the Oilers on the NHL’s board of governors.
“I have great respect for everything (Nichols) and the EIG shareholders have done for the Oilers and for the City of Edmonton. I want to continue that tradition with a commitment to strong local ownership and an exciting vision for the Oilers,” Katz said in a release.
“The centrepiece of that vision is a new world-class arena complex at the heart of a revitalized downtown.”
Katz is offering to buy 100 per cent of the team’s 7,492 outstanding shares. He needs owners representing two-thirds of the shares to get the deal passed, and has until the end of January to do it.
His various attempts to buy the Oilers were talk of the town throughout the Alberta capital for most of the past summer, as Katz promised not only to bankroll a new rink, but to build a new training facility and spend the maximum amount on player salaries allowed under the league’s salary cap.
The cap will be just over US$50 million and the Oilers are currently $5 million below it.
The Edmonton Investors group had 38 members when it stepped in nine years ago with a $100-million bid for the hockey club, saving the team from moving to Houston.
Since then, the franchise has become a financial success story with nearly all of its 14,000 season tickets sold out and a loyal following in the wake of the team’s unexpected appearance in the Stanley Cup final two years ago.
Nichols still remains a governor and director of the club, and Katz has asked him to stay involved with the team. Bill Butler is acting chairman of the investor group.