Takeover Panel slam Indo board breach

THE board of Independent News & Media (INM), led by newspaper magnate Sir Tony O’Reilly, should have made an all out offer for the company in October when it breached shareholding limits, the Irish Takeover Panel (ITP) ruled yesterday.

The Irish Examiner first reported the possible breach of the ‘30% takeover rule’ on October 11 last, but INM rubbished the story. But yesterday INM admitted the company did make a mistake and noted the ITP has accepted this.

Yesterday, the Irish Takeover Panel, in an unusual move, issued a stinging criticism of the actions of the owners of the Irish Independent and Sunday Independent.

“On 26 June, 2002, Independent commenced a share purchase scheme to buy back shares in the market. As a result of share purchases by the company between June 26 and October 11, 2002 the aggregate shareholding of the directors of Independent (‘the Board’) increased from 29.6% to 30.2%. As a consequence of the increase in their aggregate percentage shareholding, the board was under an obligation under Rule 37(a) to make a general offer to all shareholders,” the panel, chaired by Daniel O’Keeffe SC, said.

The ITP revealed that on October 29, 2002 a submission from INM set out the circumstances which gave rise to the Rule 37(a) takeover bid obligation.

“The submission requested the panel to grant a waiver of the Rule 37(a) obligation on the basis the Board had incurred the obligation due to an inadvertent mistake. The panel accepted this explanation and in these circumstances the panel decided to waive the Rule 37(a) obligation provided sufficient shares were sold by the company within a limited period to reduce the aggregate shareholding of the board below 30% and the company was so informed,” the takeover panel stated.

But after this ruling the ITP failed to issue a statement on the takeover and only yesterday broke their silence on this issue with it learned that INM failed to supply the takeover panel with information it considered pertinent to its deliberations.

Independent News & Media failed to sell shares in the company but instead two directors of the company, Gerry McGuinness and David Palmer, who held 6.75 million INM shares representing 1.2% of the issued share capital of the company, retired from the board. This brought the shares controlled by the board below 30%, eliminating the requirement of the board to sell-off shares to comply with the ITP ruling.

The ITP were infuriated when they learned this week the imminent retirement of the two men was known to the company at the time of the original hearing into the rule breach but were not communicated to them.

“The information relating to the proposed retirements had not been furnished to the panel when it had considered Independent’s submission on October 29. The intentions of these directors were relevant and should in the opinion of the panel have been communicated prior to panel’s decision,” the panel said.