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OPINION

The wrong model

The wrong model
June 28, 2017
The wrong model

The latest episode is the weird story of the takeover that wasn't (or, technically, 'isn't' since it's still in progress). Hornby's controlling shareholders - a concert party revolving around an activist fund manager, Phoenix Asset Management - are obliged to make an offer for Hornby because their shareholding has passed the 30 per cent trigger level. In fact - following the acquisition of a 21 per cent stake in Hornby from another activist, New Pistoia Income - Phoenix now owns 55 per cent of Hornby's 85m shares. So the outcome of the offer isn't in doubt - it will go unconditional and close on 14 July.

UK takeover rules dictate that Phoenix must offer remaining shareholders the price that it paid New Pistoia - 32.4p. True, that amount is now available for sellers in the market, although Phoenix's offer comes commission-free. The point, however, is that the offer concentrates investors' minds. Do they want to follow the lead suggested by New Pistoia - and by a far better-known name in fund management, Ruffer - which seems to be giving up Hornby as a bad job, or do they stick with Hornby's existing management team?

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