Friday 24 May 2019

INM small investors needed to approve sale

Independent House on Dublin's Talbot Street. Photo: Arthur Carron
Independent House on Dublin's Talbot Street. Photo: Arthur Carron
Donal O'Donovan

Donal O'Donovan

Just over 7,000 shareholders in Independent News & Media (INM), many with tiny stakes, will have a potentially outsized role in blocking or approving a €146m sale of the company, under the deal structure proposed this week.

The sale of the Irish media group - which publishes this newspaper - to Belgium-headquartered publisher Mediahuis must be approved by holders of 75pc of INM shares - a relatively low threshold.

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However, the company confirmed that in addition a majority of 50pc plus one of all shareholders who vote on the deal must also back it - regardless of the size of their stake,

There are more than 7,000 individual shareholders on the INM register including many former employees along with small investors who bought the stock going back decades.

The combined holding of thousands of those small investors is dwarfed by a handful of big players and Mediahuis already holds or has commitments for around 46pc of shares.

However, the offer from Mediahuis to buy INM and delist it from the stock market includes executing the deal through a Scheme of Arrangement - a legal mechanism that allows a buyer to takeover a business including buying shares from any unwilling minority shareholders or shareholders who cannot be identified.

There are strict conditions for use of a Scheme of Arrangement. It requires High Court approval and the INM Scheme requires approval of a double majority of shareholders voting an extraordinary general meeting (EGM).

The approval threshold does not require approval from a majority of all shareholders - only those who vote.

A detailed document setting out the terms of the Scheme will be circulated to all shareholders ahead of an EGM which is now planned but the date for which has not yet been set.

On Tuesday, Mediahuis made its lightening move to buy INM. At 7am INM's board announced to the stock market that they unanimously recommended the €146m Mediahuis bid.

The Antwerp-headquartered publisher announced later the same day that it had a 27pc stake in INM, bought from INM's largest shareholders, Denis O'Brien and Dermot Desmond, who had also committed to sell the balance of their stakes.

While INM CEO Michael Doorly told shareholders at a scheduled AGM on Tuesday that the board was open to a higher offer if one emerged, Mediahuis's stake makes it impossible for a rival to launch an alternative Scheme of Arrangement.

Mediahuis operates news brands including 'De Standaard' in Belgium and 'De Telegraaf' and 'NRC Handelsblad' in the Netherlands.

Irish Independent

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