Onex Corp. ONEX-T founder Gerry Schwartz has given up control of the private equity and credit business he founded 42 years ago through a planned change in voting power that took effect on Monday.
Three years ago, Onex shareholders approved a plan to put a sunset date on the dual-class share structure that had assured Mr. Schwartz’s control of the company.
The change creates a single class of voting shares, with one vote per share, that elects 80 per cent of the company’s board of directors. Holders of the multiple voting shares owned primarily by Mr. Schwartz and his family are still entitled to choose the other 20 per cent of board directors, but won’t otherwise be allowed to vote at shareholder meetings, subject to some exceptions.
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Mr. Schwartz, 84, is a pioneer in private equity and has been a mainstay among Canada’s corporate leaders for decades. His stake in Onex made him a billionaire, and he still owns 10.6 per cent of the company’s ordinary shares, according to a company statement on Monday.
When Onex first proposed the transition plan, Mr. Schwartz intended to hang on to control for another five years. But the company shortened the sunset period after hearing feedback from shareholders.
Gerry Schwartz, photographed in 2018, is still chairman of Onex despite ceding voting control of the private equity company he founded.Chris Young/The Globe and Mail
For years, Onex has been working to reinvent itself, most recently under the leadership of chief executive officer Bobby Le Blanc, who took over when Mr. Schwartz stepped down as CEO in 2023. Mr. Schwartz is still Onex’s chairman.
The company branched out from its private equity roots to build a successful credit business, and starting in 2019, made an ill-fated foray into private wealth management for high net-worth clients.
And last October, Mr. Le Blanc reshaped the company’s balance sheet by taking control of insurer Convex Group Ltd. in a US$7-billion deal with American International Group Inc., following a trend that has seen major private equity players push into investing insurance capital.
Mr. Le Blanc has been working to sell assets in order to return cash to investors, and to narrow a large discount between the trading price of Onex’s shares and the net value of its assets, partly through share buybacks.
Last year, Onex sold a 25-per-cent stake in WestJet Airlines for US$550-million and made back its entire investment in the company, including dividends.
On Monday, Onex also announced it is selling trade-show operator Emerald Expositions LLC to funds managed by Apollo Global Management Inc. for an undisclosed sum.
Apollo will take Emerald private, delisting its shares from the New York Stock Exchange.
Onex initially acquired Emerald for US$950-million in 2013, then made a follow-on investment in 2020, and now controls about 90 per cent of the company’s shares.
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A new CEO, Hervé Sedky, took over at Emerald in 2021, when in-person events such as trade shows had mostly shut down because of health concerns stemming from the COVID-19 pandemic.
Since then, the business has bounced back and Onex is selling Emerald at an enterprise value of US$1.5-billion, including debt. Onex investors will earn a full return on their invested capital, which is held through its third and fifth flagship private equity funds, the company said.
Onex shares fell 1.9 per cent to $113.47 on the Toronto Stock Exchange on Monday. Emerald shares rose 9.2 per cent to US$4.99 on the NYSE.
Onex will hold its annual shareholders meeting on Thursday and report its first-quarter earnings on Friday.