Jefferson Smurfit shareholders have cleared the way for the €3.7 billion takeover by Madison Dearborn Partners with their backing of two conditions for the deal, writes Jane O'Sullivan.
More than 99 per cent of shareholders who voted at Monday's extraordinary general meeting approved the spin-off of Smurfit's 29.3 per cent holding in its US associate, Smurfit Stone Container (SSC), the first hurdle in the takeover process. This was well ahead of the 75 per cent needed to pass the resolution.
In total, 678,096,999 votes were cast in favour of the spin-off, which remains subject to the approval of the High Court and to the Madison Dearborn offer for Smurfit being declared unconditional.
Shareholders also approved a second resolution regarding management participation in the leveraged buy-out. Under the terms of the deal, senior Smurfit managers will take a combined 10 per cent stake in the company.
"The independent directors are delighted that shareholders have overwhelmingly passed the resolutions," said Mr Martin Rafferty, senior non-executive director.
Mr Rafferty is overseeing the bid process for the company because the chairman and chief executive, Dr Michael Smurfit, is an interested party in the deal.
The real test of the deal comes next week when 80 per cent of the total shareholder base will have to approve the buy-out by the deadline of August 6th if it is to go ahead. Analysts said yesterday that, with 678 million votes assumed to be "in the bag" following the annual meeting, 192 million more votes or 18 per cent of the outstanding shares were needed for the offer to become unconditional.
"Next week's 80 per cent hurdle looks increasingly likely to be secured on the basis of Monday's vote," said Goodbody Stockbrokers.
Smurfit shares lost one cent to €2.95 yesterday. The shares have been trading significantly under the theoretical value of the Madison Dearborn offer which, based on yesterday's price for Smurfit Stone, was around €3.12 per share. But with the increased likelihood that the deal will go ahead, brokers said they expected the gap to start to unwind.
