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Morality and money

It is ironic that the UK’s chief financial regulator, the Financial Conduct Authority (FCA), should choose this month as the time to change the rules for companies to list their shares on the London Stock Exchange. The most important of the FCA’s changes is that companies with a dual-voting structure will once more be allowed a premium listing. That means their shares can be included in the main FTSE indices, especially the FTSE 100 and FTSE 250.

The irony lies in the fact that, playing out over the next couple of weeks, will be the end game to a bid that, plausibly, would have been unnecessary had the rules already been in place. The bid in question is the offer for the non-voting ‘A’ shares in Daily Mail & General Trust (DMGT) by the Rothermere family, who control all the voting rights in the publishing group via just 8 per cent of its equity capital.

Among the reasons for justifying the bid is that the family, now in its fourth generation of control, has no intention of reducing its presence. Yet arguably DMGT’s share rating is depressed by the company’s dual-voting structure, a major effect of which is that the shares are not held in tracker funds since they are not a constituent of the FTSE 250 index even though DMGT’s market value – £2.3bn – is plenty big enough. The solution, suggest the Rothermeres and DMGT’s independent directors, is to take advantage of the fact the group is flush with cash following a corporate tidy-up and make a cash-and-shares offer for the non-voting stock to take DMGT private.

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