A group of minority shareholders in Ardagh Glass Ltd are considering taking a minority protection action against the directors of the company over its takeover by Caona plc.
The shareholders have instructed a firm of solicitors, Donal Reilly & Collins, to see if the action can be taken. They are unhappy at the €4 per share price they have been offered and claim that the Ardagh board has not provided sufficient information for them to judge if it is fair.
Caona is a special purpose company controlled by a number of Ardagh's large shareholders. The biggest stakes are held by businessman Paul Coulson and his investment company Yeoman.
Members of the management of Ardagh and some of the directors also have shares in Caona, which claims to have received acceptances for its offer from shareholders holding in excess of 96 per cent of the company.
Having passed the 75 per cent threshold set under Guernsey law - Ardagh is registered in Guernsey - the owners of Caona can move to compulsorily acquire the remaining shares. Ordinary shareholders in Ardagh are being allowed to convert 10 per cent of their holdings into shares in Caona.
John Collins of Donal Reilly & Collins said the firm had been instructed "to investigate if we can bring minority protection proceedings against the directors. Any such action is predicated on establishing that the true value of the shares is greater than the amount offered by Caona".
He said his firm represented in excess of 2 per cent of Ardagh's approximately 700 shareholders.
He said the shareholders had sought the minutes of the directors' meetings at which the value of the company was discussed before the offer from Caona was accepted.
Mr Collins said the company had refused to provide them, saying the shareholders had no right to see these records under Guernsey law. "If the price is fair, then why the technical objection to furnishing shareholders with the directors' consideration of the offer?" he said.
The minority shareholders also point out that no independent directors' report or recommendation was made available to the shareholders. Ardagh has said this is not a requirement for a private company registered in Guernsey.
In a statement issued last night Caona said its offer had now been accepted by shareholders owning 96 per cent of the company, including the shareholders represented by Mr Collins. "They wanted to accept on the condition that they were seeking to mitigate their losses but were told that their acceptances would only be accepted on the basis of the terms and conditions of the offer. They then accepted the offer," according to the statement.
Responding to Caona's statement, Mr Collins said: "The dissident shareholders believe Caona has got Ardagh at a bargain. They have accepted the offer to ensure they get some shares in Caona, to share in Caona's bargain.
"They are acting to mitigate their loss. The acceptance of the offer by the dissident shareholders does not release the directors from their responsibilities. The absence of an independent assessment of the valuation is the issue."
Ardagh Glass was spun off from Ardagh plc (since renamed South Wharf plc) in 2003 and taken private at a valuation of €1.10 per share. It comprised the manufacturing assets of the business and has grown significantly since then via a series of acquisitions. Last year, it made profits of €20 million on a turnover of €444 million.
A bond document issued by Caona puts the shareholders' funds at €65.4 million, which values it at around €4.40 per share when generous options granted to management are added to the 13.3 million shares in existence.
Caona is raising €125 million, secured on the assets of Ardagh, to fund the takeover, which needs approval at an extraordinary general meeting of Ardagh.
After the Caona takeover Yeoman will have a 45 per cent stake, while Mr Coulson (who owns 33 per cent of Yeoman) will hold 25 per cent and other management and directors will hold 15 per cent.
