Lund to get Lucorn stake if Clondalkin MBO succeeds

MR Henry Lund, Clondalkin Group's chairman, will end up with a 6.69 per cent shareholding in Lucorn, the ultimate parent of Edgemead, the company making the bid for Clondalkin, if the management buyout (MBO) succeed, according to the offer document. Mr Norbert McDermott, managing director, will have 4.39 per cent. There is a 9.34 per cent reserved for option holders and if they do not take up their holdings, they will be taken up by Candover, the venture capitalist, backing the deal, and Mr Lund would take up a small proportion. Candover will have a 69 per cent interest.

The Edgemead financing structure will comprise equity provided by Candover and the MBO team of 44. Candover will provide €968,750 for the shares and subscribe €121 million for loan notes. The MBO team will provide €1 million for the equity and subscribe €3.9 million for loan notes. The precise breakdown will be determined by the number of options exercised, the document says.

Lucorn has agreed to pay Candover £800,000 sterling (€1.25 million) in connection with the shareholders' agreement. Clondalkin has agreed to pay Candover a fee of €3.25 million if any counter bid becomes unconditional.

The offer values Clondalkin at €475 million. The offer per share amounts to €9.10.

A number of directors purchased Clondalkin shares in March. These included Mr McDermott, who bought 150,112 at €6.60 per share, Mr Colman O'Neill (56,292 at €6.60), Mr Derek Scally (46,910 at €6.60) and Mr Liam Bergin (46,910 at €6.60). The directors were also granted options over 560,000 shares at €5.60 per share. Shareholders representing 38 per cent of the equity have given irrevocable commitments to accept the offer. The document notes the offer represents a 48 per cent gain on the share price prior to the offer.

Three institutional shareholders, Aberdeen Asset Managers, Friends First and Norwich have expressed reservation about the offer and have not given irrevocable acceptances. Norwich Union told The Irish Times it would prefer to have a contested bid at this stage, "thereby extracting maximum value for current shareholders". It also said it "did not sell 100,000 shares at €6.30 recently" as stated in last week's "Business Opinion". However, it did sell 100,000 on November 4th, 1998, and has less shares now than it had prior to that sale.