Mr Nelson Loane, chief executive of Adare Printing Group, will end up with an 18 per cent stake in NAPG, the vehicle making a takeover bid for Adare, according to the offer document. Provided the deal goes ahead, he will effectively end up with a much larger stake in Adare, which now amounts to around 8 per cent. Mr James Coll, a co-director, will end up with 2 per cent. Funds of venture capitalist, Allen, McGuire, will have an 80 per cent stake. The takeover bid, recommended by the independent directors, Mr Denis Bergin and Mr James Osborne, has already received backing from shareholders representing 54.9 per cent of the equity. The Adare board has decided to pay these directors an additional fee of £100,000 each because of the extra work involved. These fees will be paid whether or not the offer becomes unconditional. The Adare employees are to be offered up to 555,556 Adare shares under a share option scheme, based on performance, within three months of the offer being declared unconditional.
That would represent 10 per cent of the enlarged equity. And there may be an additional 5 per cent issued if warrants are exercised by Uberior Trading, a part of Bank of Scotland.
The independent directors, advised by Mr Richard Keatinge, said they are advising shareholders to accept the offer of €11.46 per share, valuing the company at €161.1 million (£127 million), for several reasons. These include the recent poor performance of Adare's share price, which fell from an all-time high of €13.3 in April 1998 to €5.50 on February 2000. It offers a premium of 70.3 per cent on the price prior to the initial MBO approach by finance director, Mr Peter Lynch.
The NAPG bid, they said, resulted from a competitive process which involved two management groups (Mr Lynch and Mr Loane) and "no approach or expression of interest has been forthcoming other than from the management of Adare". Also with the adverse investor sentiment to smaller stocks "the benefits to shareholders of Adare remaining a publicly quoted company appear limited". Allen, McGuire is to be paid an inducement fee of 1 per cent of the value of the offer, or about £1 million sterling, if the independent directors withdraw or modify their recommendation, or if the offer lapses or is withdrawn. The offer is subject to approval from the usual regulatory authorities.
Although Mr Lynch withdrew from the bidding process and was unsuccessful in trying to resurrect a new bid, he stands to gain about €4 million (£3.2 million) from the bid. He resigned from the company last week. Mr Loane will receive €12.9 million (£10.2 million) for his Adare shares. He also stands to make a capital profit of some €1.9 million (£1.5 million) from his options.
