Takeover Panel gives Alphyra MBO team go-ahead

Takeover target Alphyra reports results today clear of the shadow of the Irish Takeover Panel, which had been considering whether the actions of its management had frustrated rival offers for the company.

The electronic payment solutions group is the subject of a management buyout bid by 10 of its executives. A spokesman for the Rendina MBO vehicle last night welcomed the Takeover Panel ruling. In a statement, the group said: "Rendina believes that as the matter has now been resolved, shareholders can focus on considering the increased cash offer of €2.70 per share."

Rendina, led by Alphyra chief executive Mr John Nagle, has already increased its offer from €2.45 to €2.70 but has failed to persuade large numbers of shareholders to accept its offer. Acceptances are understood to be still fractionally below 40 per cent with just a week left to the February 26th closing date for the offer.

The Federated Kaufmann Fund, one of the group's larger shareholders, complained to the Takeover Panel following comments from Rendina that the management would consider any offer for the company from First Data Corp, the owner of Western Union, to be "hostile and unwelcome".

First Data had looked over the company and indicated it was interested in making a bid at the €2.80 level. However, it suddenly withdrew from the process.

Kaufmann complained that the execution of the Alphyra MBO broke two principles and two specific rules under the Irish takeover code. It sought to stop the clock on the takeover timetable pending an investigation.

Specifically, it alleged that there were sufficient circumstances to merit an investigation into whether the actions of the MBO team constituted action frustrating rival offers. Kaufmann also said Rendina did not include enough information on the nature of Alphyra's business and its financial and trading prospects in its announcements and its offer document.

The Takeover Panel ruled that there was no specific requirement to disclose the information sought by Kaufmann in the offer document, although it accepted that principle four did say shareholders were entitled to receive sufficient information and advice to enable them to make an informed decision on an offer. It therefore ruled that there had been no breach of principle four or rule 24.2(c).

On the issue of frustrating action, the Takeover Panel ruled that the "hostile and unwelcome" comment, if made by members of the MBO team, was inappropriate. However, it stopped short of censuring the team, pointing to the statement a day later from Alphyra's independent directors that they had sole responsibility for considering any rival offer.

It did not comment on the fact that the aggressive stance of the MBO team was repeated a day after the independent directors' statement. It is understood that the panel drew a line between statements from Rendina and statements from Alphyra management members in that company, despite the MBO team's stated view that Mr Nagle spoke for the group.

The panel concluded that there had been no breach of the rules and rejected the calls for a suspension of the process.