Real Estate Opportunities (REO) said yesterday that dissident shareholders Dawnay Day and Noel Smyth had agreed to sell their 40 per cent stake in the group for £46 million (€66.9 million).
REO said it had agreed to procure purchasers for the stake, or to buy it itself, bringing to an end a three-year battle for control of the company. The 78.7 million shares, representing 39.9 per cent of the company, will be bought at a cash price of 58.5p each, a 15 per cent discount to the mid-market price before the announcement.
Speaking to The Irish Times from New York, Dawnay Day chairman Guy Naggar said the discount reflected the size of the stake being sold.
However, he said the London-based company, which held a stake of just under 30 per cent in REO, had made "a decent profit" on its investment. It had decided to exit because it had been "looking to buy control of the company and as that proved impossible, we decided to sell".
Mr Smyth, who bought into the company in July 2003, is believed to have paid around €9 million to build up his 10 per cent shareholding. He will receive around £11.5 million sterling (€16.7 million) from the disposal of his shares, a healthy profit for his 19-month investment.
REO's financial advisers are currently in talks with investors regarding the placing of the shares. In the event that the company fails to place the entire stake, it will buy the stock itself. But to do so, it will need the approval of independent shareholders and of the Takeover Panel, given that such a purchase would push the stake held by Treasury Holdings to more than 37 per cent, triggering an outright bid for the company.
Yesterday's agreement follows long-running tensions between Dawnay Day and Mr Smyth on the one hand, and the board of REO, which erupted into the open at last year's annual meeting in Jersey. Among the issues of concern to the two large shareholders were the dominant role played in REO by Treasury and the large management fees being paid to the property company, which is controlled by Mr John Ronan and Mr Richard Barrett. The failure to identify the beneficial owner of another large block of shares, held in the name of a company called Calyx, was another cause of contention.
However, such issues remain of concern to small shareholders despite the departure of Dawnay Day and Mr Smyth.
Mr Michael Chadwick, executive chairman of Grafton Group who holds around 1 per cent of REO, said yesterday that he would be "looking to the board to ensure the proper running of the company and to manage the potential conflict between REO shareholders and the Treasury directors and shareholders".
