Two indicative offers for Arnott’s
It is expected that Carrgran, the Lehman Brothers vehicle involving former Power Leisure executive Peter O’Grady-Walshe and also a rival consortium involving Arnotts director Richard Nesbitt will make bids for the company.
It has emerged that Anglo Irish Bank is backing the €245 million MBO led by Nesbitt, which emerged after the board rejected previous offers by Carrgran.
The Lehman grouping offered €11.5 per share last June and raised it to €11.8 per share in December.
An offer of €12.75 in January, which would have valued Arnotts at €227 million, was also rejected as the board said it failed to value the business and its prospects adequately.
The share price closed last week at €12.50.
The two indicative offers this week are likely to be above €13 per share. However, it was also rumoured last week that a third possible bidder might yet emerge from Britain.
It has emerged that Arnotts’ managing director, Seamus Duignan, could receive a payout of €1.2 million - three years’ salary - if the company is taken over before his contract runs out in November.
He receives a salary of €300,000 per annum and will also be in line for a pension of €240,000 a year.
Mr Duignan’s deputy, Bill Kelly, could receive a payment of around €450,000. His contract can only be terminated on payment of two years’ salary.
However, reports yesterday said these contracts would not be in line with guidelines issued on payments to directors on termination of their positions.
The guidelines were issued by the National Association of Pension Funds and the Association of British Insurers last December.
They state that protection for executives of more than a year’s salary where a change of control occurs should be avoided, except in “highly exceptional circumstances”.
But the guidelines also note that boards cannot breach provisions which are contractually binding.
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