The offer has had private investors fuming on internet message boards, and as a result has so far failed to achieve the necessary support by its first-close deadline of Friday 22 June. Undeterred the MMGG bid-team are pushing on and have come out swinging, pointing out that if investors don’t accept the offer their shares could be subject to reduced liquidity and marketability. And the fight could yet get dirtier still - under takeover rules MMGG, with more than 50.1 per cent support, could utilise a "right to waiver" and announce the offer “unconditional as to acceptances” and proceed to an EGM to take the group private. They would need over 75 per cent support to vote this through, and with 71.4 per cent in the bag already it would require a turnout of more than 95 per cent of shareholders and proxy votes to defeat the resolution.
The reaction from shareholders is hardly surprising, as the 50p offer - valuing the group at around £23m - comes at a deep discount to both the 160p listing price in 2006 and the year-end net asset value of £60.1m, or 133p per share. The timing also stinks as it comes only months after management cut the dividend, causing shares to halve from 80p to 40p. Launching the offer just before the extended Queen’s Jubilee weekend seems like the perfect time to land a knockout blow on your shareholders while their guard is down.
MMGG now has until 6 July to either find more people for its corner, or impose the right to waiver certain conditions and proceed with the de-listing. After which shareholders have two options: they could refuse the offer and become shareholders in a private company or they have a two week period during which they can decide to take the 50p and run.
Much like recent coverage of celebrities circumventing our swiss cheese tax system, the blame doesn’t lay entirely with the morality of Morson management. After all, don't we all try to buy low and sell high in the investment game, and that unfortunately means someone will always on the losing side of the trade. The problem lays with the laws that allow them to do this, and the light touch regulation which turns a blind eye while shareholders take another beating. Companies complain they can't raise enough funds to invest in growth, but when long-suffering shareholders are treated like this, is it any wonder?
