First National Financial Corp. will be acquired by private equity heavyweight Birch Hill Equity Partners and Brookfield Asset Management for a $2.9 billion deal, which will allow its founders to retain a minority stake in the company.
The agreement will occupy First National Private through the newly formed entity Regal Bidco Inc., which will purchase all outstanding common shares, including all outstanding shares retained by founders Stephen Smith and Moray Tawse, at $48 per share. That’s 15% higher than the company’s 30-day volume-weighted average, exceeding its 52-week high.
After the deal, Smith and Toss will own about 19% of indirect ownership in the company, respectively, agreeing to sell two-thirds of their respective shares, currently accounting for 37.4% and 34% of the outstanding shares.
“This deal represents the beginning of an exciting new chapter for First National,” said Jason Ellis, the company’s CEO. “Birch Hill and Brookfield bring important expertise in the Canadian financial services industry and we are excited to work with them to grow our platform, drive innovation and deliver delivery to our customers, employees and institutional partners.”
The transaction is expected to be completed in the fourth quarter of 2025, pending approval by shareholders, courts and regulatory authorities.
Strategic review leads to sales
First National said the agreement follows a “strong strategic review process” led by the Special Committee of Independent Directors and Advisors. Multiple bids were considered and were considered the most favorable offer for shareholders.
BMO Capital Markets is an independent valuation and financial adviser to the Special Committee, determining that the equity market value of the stock is between $44 and $50. The company also concluded that it was a financially $48 offer to shareholders, namely Smith and Toss.
After the closure, Birch Hill and Brookfield will hold about 62% of the First National stake, with the remaining 38% sharing between Smith, Tawse and its branches.
Preferred stocks and notes are not affected
The company’s preferred shares (Series and Series 2) will be listed on the Toronto Stock Exchange and will continue trading after the closure. Likewise, First National will continue to pay its regular dividends until the end of the transaction.
However, the outstanding unsecured notes (3, 4 and 5) at that time will be redeemed and the holder receives the applicable redemption price plus accrued interest.
From IPO to Privacy
First National was publicly available at a price of $2.15 per share in 2006 (split adjustment). The company said the purchase price includes dividends, which means a total shareholder return of more than 2,100% since the public offering.
First National, with more than $155 billion in mortgages, is one of Canada’s largest non-bank lenders. The company maintains a strong broker relationship and industry observers will closely monitor how the new ownership structure affects its broker strategy and platform innovation.
Shareholders are expected to vote on the deal at a special meeting in September. If approved, the company’s common stock will stand out from TSX.
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Last modified: July 28, 2025
