Investors in ICG can block proposed buyout

Doyle Group, One51 Capital and the other investors who recently bought into Irish Continental Group (ICG) now hold enough of the company to block the proposed management buyout (MBO).

ICG chief executive Éamonn Rothwell and his colleagues are bidding €18.50 a-share - €471 million - for the group, which owns Irish Ferries, but that offer looks likely to be refused by investors, who have paid between €19.15 and €20.03 for their holdings.

These investors include Cork-based shipping group Doyle, the Philip Lynch-led One51 investment business, and financial institutions and funds, Lehmann Brothers, Sandell Asset Management and Centaurus Capital. These backers bought into the group after the MBO was announced, but are not acting together.

It will take 20.52 per cent of ICG to halt the management bid. But according to their individual declarations to the Irish Stock Exchange, the five investors' holdings in the company total 22.29 per cent.

Lehmann Brothers hold the biggest block with 6.72 per cent, One51 owns 5.64 per cent, Centaurus has 3.64 per cent, Sandell Asset Management has 3.38 per cent and Doyle has 2.91 per cent.

A bid such as the MBO offer for ICG usually needs the support of shareholders with more than 75 per cent of the company.

However, in the case of ICG, the High Court has ruled that there are two classes of stakeholder.

The first is the MBO team and connected parties, which include independent directors and its banker, AIB. The second is the independent shareholders, which includes those equity holders who bought at or above the MBO offer price.

The bid needs the support of more than 75 per cent of both classes to succeed. As the independent shareholders have just over 82 per cent of the company, this means that just over a quarter of that figure, 20.52 per cent, is enough to halt the bid.

Shareholders are due to vote on the offer at a series of meetings on April 12th. Sources say it is unlikely that investors who bought shares for more than the €18.50 offer will accept this price.

There is no evidence to suggest that any of the five parties are acting together. Reports yesterday said that the Irish Stock Exchange's takeover panel, which regulates these transactions, is likely to put pressure on One51 and Doyle Group to establish their intentions and to ask them if they have been acting in concert.

One51 was spun off from the old IAWS Co-op two years ago and has been building stakes in a number of utility and waste management businesses since then. It is a major stakeholder in NTR.

Doyle Group is a long-established Cork-based stevedoring and shipping company. It has operations in Dublin Port, where ICG's largest competitor, Stena Line, is said to be a big client.