Canada's Home Capital rejects takeover offer from unnamed buyer

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The entry to the Home Capital Group's headquarters are seen in an office tower in the financial district of Toronto, Ontario, Canada, April 26, 2017. REUTERS/Chris Helgren/File Photo

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Aug 15 (Reuters) - Canada's Home Capital Group Inc (HCG.TO) said on Monday that its board had rejected an unsolicited takeover bid from an unnamed buyer as it undervalued the mortgage lender.

The Toronto-based company did not disclose the exact price, but said it exceeded C$28.60 per share – the maximum price it was offering its shareholders for a stock buyback it had announced earlier this month.

The company said this was the second time the buyer had made an offer and that the first one was made with a partner.

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Shares of Home Capital were up nearly 4% at C$29.54 ($22.87) on Monday. As of last close, they had fallen 27% this year and were trading below book value.

Earlier this month, the company reported a drop in second-quarter profit, highlighting the turmoil in the Canadian housing market due to rising cost of mortgages.

Ultra-low borrowing costs and pandemic-related stimulus measures contributed to a more than 50% rise in average home prices in Canada over the last two years. read more

Warren Buffett's Berkshire Hathaway Inc (BRKa.N) extended a lifeline to Home Capital in 2017, buying a 20% stake and offering a C$2 billion credit line after the company's investors withdrew more than 90% of funds from its high-interest savings accounts.

($1 = 1.2919 Canadian dollars)

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Reporting by Niket Nishant and Mehnaz Yasmin in Bengaluru; Editing by Shinjini Ganguli and Anil D'Silva

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