Martin Rafferty to chair group vetting Smurfit offers

 

The senior independent director of the Jefferson Smurfit Group, Mr Martin Rafferty, is expected to be appointed chairman of the sub-committee charged with examining any offers for the company that may emerge from the approach from the Chicago-based private investment house Madison Dearborn and the Smurfit family.

The Smurfit board met on Monday night to consider the approach and to appoint a board sub-committee that would independently examine any offer. It is thought that an announcement on the board sub-committee may come as early as today and that Mr Rafferty will be its chairman. The sub-committee has the responsibility to vet any offer and decide whether or not to recommend it to Smurfit's 16,500 shareholders.

No members of the Smurfit family or senior executives of the group such as chief executive Mr Gary McGann will be on the committee, because they would have an obvious conflict of interest. If a bid does emerge from Madison Dearborn, Dr Michael Smurfit, his brothers Alan and Dermot, son Tony and the chief executive, Mr McGann, are expected to be part of a substantial management element of a heavily leveraged buyout.

The 69-year-old Mr Rafferty is a member of the Smurfit remuneration committee where he would have been involved in deciding on Dr Michael Smurfit's heavily-criticised multi-million euro remuneration package. He is also a member of the Smurfit audit committee which oversees the internal financial management of the group.

Mr Rafferty is a former managing director of Allied Irish Investment Bank, the former investment banking arm of AIB. Since his retirement from AIIB, Mr Rafferty has taken on a number of non-executive directorships. As well as being a non-executive director of Smurfit, he is chairman of the pharmaceutical distribution group United Drug and building materials group Readymix. He is also chairman of Ulster Bank, the Irish arm of Royal Bank of Scotland and Allianz-Irish Life Holdings whose main asset is Church & General Insurance.

Mr Rafferty has 23,959 Smurfit shares - currently worth €76,000 and he received director's fees of €54,000 last year. Given the importance of the approach from Madison Dearborn, it is thought that the sub-committee will include other "heavyweight" directors such as Smurfit's former chief operations officer Mr Howard Kilroy and former Eircom chairman Mr Ray MacSharry.

But nothing of substance is expected from the Madison Dearborn approach for some time, and it is likely to be at least four weeks before any offer emerges, if one emerges at all.

Meanwhile, Smurfit shares continued to trade actively on the Dublin and London markets although volumes were well down on the huge levels of last week. The shares traded in a narrow range between €3.18 and €3.22 before closing two cents lower on €3.19.

One of the biggest traders in Smurfit shares last week was AIB Investment Managers which has disclosed that it bought 5.7 million Smurfit shares last Friday at prices between €3.09 and €3.20 and sold another 6.8 million shares at prices between €3.05 and €3.26. AIB now holds 19.4 million Smurfit shares or 1.75 per cent of the total.

In contrast to AIBIM's trading activities, Bank of Ireland Asset Management - Smurfit's biggest Irish institutional shareholder - has been actively adding to its stake. BIAM disclosed it bought 1.8 million shares last Friday at prices between €3.10 and €3.15 to bring its stake to 73.9 million shares or 6.8 per cent of the total.