Mr Nelson Loane, chief executive of Adare Printing Group, has succeeded in his tussle with fellow director Mr Peter Lynch for control of the group.
NAPG, a new company controlled by venture capitalists Allen McGuire & Partners and backed by Mr Loane, has made a €161.2 million (£127 million) bid for Adare. It has already received backing from shareholders representing 54.9 per cent of the equity and will succeed with the bid unless there is a larger counter-bid. The shares soared by €2.50 to €11 following the announced bid.
The cash bid values each ordinary shares at €11.46, which is ahead of the higher estimates touted after Mr Loane emerged with counter-proposals to those initiated by finance director Mr Lynch. Shareholders are also entitled to keep the second interim dividend of 8.5p declared yesterday. NAPG noted that the offer represents a premium of some 70.3 per cent to the closing dealt price prior to the announcement of a possible bid. There is also an offer of €1.62 for each of the preference shares.
Mr Lynch, who opted out of the talks in the middle of last month, unsuccessfully tried to resurrect a new bid. He has resigned from Adare and yesterday said he had no comment to make. However, as the holder of 125,000 Adare shares, and 400,000 options, he stands to gain about €4 million (£3.2 million) from the bid.
When NAPG announced its bid early yesterday morning it was conditional on approval from the independent directors, and the receipt of irrevocable acceptances from shareholders representing 25 per cent of the equity by noon. It gained effective control when Allen McGuire funds bought 1.9 million shares in the market, representing 13.5 per cent, when acceptances were received from Mr Nelson and his co-director, Mr James Coll, in respect of 1.2 million shares, representing 8.6 per cent of the equity, and when it received irrevocable acceptances (these cease to be binding if a higher offer is received) from institutional shareholders representing 32.8 per cent of the equity.
But predictably, Mr John Lawrie, chairman of Aberdeen Asset Management Ireland, did not accept in respect of the 5 per cent stake held by Scottish Provident Irish Holding. Nor is he likely to accept unless NAPG reaches an 80 per cent acceptance rate which would trigger a compulsory acquisition of the remaining shares.
He told The Irish Times "the value of many of the smaller quoted Irish companies has not been recognised in the market for some time. The pressure on institutional investors to reduce their investment in Irish equities has made the situation worse. As a consequence, it is once again possible for a small Irish quoted company to be bid for and probably bought at a price which would otherwise be recognised as ludicrously low".
While he conceded the bid would probably succeed, he complained about the low price of the bid, noting it is under 10 times earnings which compares unfavourably with the 5.5 per cent return from gilts. Mr Loane and Mr Coll are to "reinvest a significant proportion of the proceeds of their existing investment in Adare in NAPG. The opportunity to invest in NAPG will be extended to certain other Adare managers and employees" according to the NAPG document. This, however, has not been quantified but will probably depend on how the talks develop.
Mr Eamon Allen, managing director of Allen McGuire, said he was "delighted to be involved in this opportunity to work alongside Adare's management and to increase our direct investment in the printing industry. Together we will endeavour to develop Adare further into a successful private company". Allen McGuire is based in Dublin. Founded in 1989 it has completed 11 transactions and now has four funds under management, totalling $120 million. Two of these funds will subscribe for £4 million sterling of ordinary shares in NAPG and £20.5 million in loan notes.
The independent directors of Adare were advised by Mr Richard Keatinge. They are recommending the deal to shareholders.
