Leslie Buckley, the former chairman of Independent News & Media (INM), allegedly told senior executives at the company it would be "insulting" to its largest shareholder Denis O'Brien to opt for a lower valuation in its bid to buy Newstalk because he had previously "bailed out" the media giant.
Mr Buckley is a friend and close associate of Mr O'Brien, who owns just under 30 per cent of INM. Mr O'Brien also owns Communicorp, a media company which runs a number of radio stations, including Newstalk.
The affair dates back to early 2016 when Mr Buckley and then INM chief executive Robert Pitt fell out over a proposal for INM to buy Newstalk.
The Irish Independent has reported that court papers filed by the ODCE claim Mr Buckley told Mr Pitt and INM's chief financial officer Ryan Preston that Mr O'Brien was "entitled to a reward for bailing out INM" and that he wanted to go with a higher valuation.
Mr Pitt told the ODCE this occurred in a meeting with Mr Buckley on October 20th, 2016, during which Mr Buckley is alleged to have said he would “do the deal regardless”. A valuation of €14 million for Newstalk was “insulting to the major shareholder”.
Mr O’Brien owns 29.9 per cent of INM.
According to the court papers, valuations ranging from €10 million to €35 million for the station were considered.
Valuation gap
Mr Pitt initially valued Newstalk at €12 million. INM’s own advisers, Davy, would not value the station at above €14 million. However, IBI, advisers to Mr O’Brien’s Communicorp proposed an initial valuation at €30 million to €35 million.
Mr Pitt subsequently reported his concerns over a need to reward Mr O'Brien to Jerome Kennedy, then an independent director on INM's board, the paper reports.
Meetings subsequently took place with updated valuations from Davy and IBI, the latter’s valuation falling to €26.8 million while Davy’s revision valued Newstalk at a range of €11 million to €15 million, with an outlier range of €16.7 million, according to the court papers, as reported.
According to the court papers, Mr Preston said he and Mr Pitt had been put under “severe pressure” to pay a value which was considerably higher than he thought Newstalk to be worth and that he was concerned the proposed purchase price would not represent value to INM’s shareholders.
Whistleblower complaints
Mr Preston was of the view that the IBI valuation was “crazy”, according to the papers. “Do you not get it, lads?” Mr Buckley is alleged to have said to Mr Pitt and Mr Preston at the meeting.
Mr Pitt and Mr Preston subsequently made whistleblower complaints to the ODCE, which carried out an investigation into the matter.
It has since applied to the High Court to appoint inspectors who, unlike the independent reviewers previously appointed by the company to examine the conflict, will have powers of compellability and the ability to conduct cross-examination in any investigation into matters at the company.
