Indigo Books & Music Inc. shareholders have voted to approve a deal that will see the retailer become a private company.
Shareholders voted Monday in favour of a $2.50 per share offer from Trilogy Retail Holdings Inc. and Trilogy Investments L.P., which already held a 56 per cent stake in Indigo.
The Trilogy companies are owned by Gerald Schwartz, the spouse of Indigo chief executive Heather Reisman, and had originally offered $2.25 per share but raised their bid in April.
“We are pleased with the result of today’s vote and look forward to continuing our work on Indigo’s transformation strategy,” Reisman said in a statement shared with CBC News.
“We remain deeply committed to our customers and to all our stakeholders as we work together to inspire reading and enrich the lives of booklovers across the country.”
For Trilogy’s offer to be accepted, it required approval by a two-thirds majority vote of Indigo shareholders and a simple majority vote by shareholders not linked to Trilogy and its affiliates.
Slightly more than 95 per cent of votes from shareholders represented at Monday’s meeting were in favour of accepting the deal. Out of the shareholders that were independent of Trilogy or its affiliates, just shy of 83 per cent of the votes supported the offer.
‘Bleeding cash’
The privatization allows Indigo to avoid some scrutiny as it works to bring profitability and growth back to Canada’s biggest bookstore.
“The rationale is not to be saddled with public reporting responsibilities because Indigo has been through a lot,” said Richard Leblanc, a professor of governance, law and ethics at York University in Toronto, in February, when the Trilogy firms made their offer.
Trilogy now faces a hefty amount of work.
Indigo is still recovering from a cyber attack that downed its website for a lengthy period last year, a series of quarterly losses leading up to a January layoff, and a succession of changes that saw four of 10 board members depart last year with one claiming mistreatment and “a loss of confidence in board leadership.”
Reisman, who retired amid the turmoil, returned within months to helm Indigo.
The issues have played out as inflation and high interest rates make many Canadians think twice about opening their wallets, especially for the discretionary items Indigo is known for.
The trend cropped up particularly in the holiday season, when Indigo executives admitted they had overbought merchandise and stocked an assortment of merchandise they found customers weren’t looking for in the final weeks before Christmas.
“Despite all their best efforts, they are not doing well,” Kai Li, the Canada Research Chair in corporate governance who teaches at the University of British Columbia, said of Indigo in February.
“They are bleeding cash.”
Sale expected to close in June
To turn things around, Indigo has been carrying out a transformation plan since at least November. It’s offered few specifics, but Reisman, who founded the chain in 1996, has said it is meant to “return Indigo to both growth and profitability.”
In the months since she mentioned the plan, some stores have seen wellness products and the popular American Girl dolls culled from their shelves and Columbus Cafe & Co. has moved into some Indigo spaces previously held by Starbucks. Reisman has also pledged in newsletters to bring back its digital inventory search kiosks, program more events and add seating to more stores.
Trilogy hasn’t said much about its plans for Indigo beyond it wanting to take the company private, but no public opposition to the deal has mounted, likely because the money offered reflected a 69 per cent premium on the share price of $1.48 that Indigo had when Trilogy first made its bid.
Indigo’s share price sat at $2.48 ahead of the Monday vote.
Last month, the offer garnered the support from a special committee of independent directors Indigo formed to assess the deal.
Earlier this month, Indigo also said that leading independent proxy advisory firms Institutional Shareholder Services and Glass Lewis had recommended shareholders approve the deal.
Indigo has said it expects the transaction to close in June and its shares to be delisted from the Toronto Stock Exchange sometime after.