Mr Brendan Murtagh, one of the founding directors of Kingspan, the building products group, has resigned from the board, following share dealings by people connected with him in a targeted take-over company. That company, Hewetson plc, has now received an offer of £37.1 million sterling from Kingspan.
Some brokers were expressing surprise at his decision to step down as the deals involved only 33,000 shares with a purchase value of only £46,000 sterling which is minute when compared with the substantial wealth of the Murtagh family. Mr Brendan Murtagh's holding in Kingspan is valued at almost £40 million.
However, the Stock Exchange is investigating the dealings to see if there are any insider trading implications. The dealings involved people connected with Mr Brendan Murtagh's two sons, who are employed by the company. The board is understood to have been alerted to the trading by its brokers, ABM AMRO.
In an announcement Kingspan said: "Mr Brendan Murtagh has expressed his regret to the board that he could have been responsible for a breach of confidentiality. In the interests of the Kingspan Group and as an indication of the seriousness with which he views the matter, he has tendered his resignation from the board."
Mr Murtagh - brother of the executive chairman, Mr Eugene Murtagh - owns 21.3 million Kingspan shares (or 12.8 per cent of the total) and has at the company's request, decided to continue to serve in his executive capacity, with responsibility for group marketing.
The dealings in Hewetson shares were made in the name of the wife of one of Mr Brendan Murtagh's sons and in the name of a close friend of another one of his sons after Kingspan had begun due diligence and signed a confidentiality agreement with Hewetson on November 10th. On November 24th, 20,000 shares in Hewetson were purchased in the name of Ms Nicky Shiers, the wife of Mr Alan Murtagh, who is Mr Brendan Murtagh's son, at 137.5p sterling per share. On the following day, 13,000 shares in Hewetson were purchased in the name of Ms Kathryn McFadden, a close friend of Mr Fergal Murtagh, Mr Brendan Murtagh's son, at 142p per share.
In a detailed account of the transactions, Kingspan said on the evening of November 25, the board of Hewetson agreed to further discussions which took place on November 26th at which terms were agreed. "After Mr Brendan Murtagh became aware of the dealings in Hewetson's shares, he advised his sons to arrange for the sale of the shares in Hewetson," the statement said.
Ms McFadden sold her holding on November 30th at 130p sterling per share, incurring a loss of £1,560. Ms Shiers sold her shareholding on December 8th at 144p per share, making a profit of £1,300. The Kingspan board has said it is satisfied that "while Mr Brendan Murtagh may inadvertently have disclosed confidential information to his sons, he did not encourage them to deal in Hewetson's shares nor did he envisage that they would do so. The board is also satisfied that Mr Brendan Murtagh did not act dishonestly".
Mr Murtagh is an investor in a number of companies and has four million shares in Howard Holdings, a London-based property company which plans an Irish flotation early in the New Year.
