Shepherd 'impossible for anyone to takeover Newcastle'

[Northern Monkey]

Can someone tell me if Shepherd wants to buy Hall's shares some day from where he'll get so much money?

 

 

the bank?

 

He'll get a loan or what?

 

Probably a second mortgage.

 

Top up loan.

 

Or he could go to that nice Carol Vordeman off the telly.

[Raconteur]

I have no idea about British securities laws, so could someone explain the following questions (and phrasing it in a way so everyone can understand it would be nice )

 

1) It has been said that anyone owning 30% or more must launch a takeover bid. My understanding is that this is why the shares have been split up between Shepherd and Sir John Hall - could anyone confirm that is the case?

 

2) If someone were to buy the Halls combined shareholding (41.8%) they would be obliged to launch a takeover bill - what is to stop that person making a ridiculous bid - say a penny per share - for the remaining 58.2%? Are there laws which say they have to offer all shareholders the same value as they paid for the first 41.8%?

 

3) Even if such a law existed (that they must offer the same value) there is no compulsion to sell until ownership is 90% - so what would stop an investor buying the Halls holding, making a half-hearted takeover bid, watching it fail and sitting back with their 41.8%? I know that this is a lot of capital to invest for a minority shareholding - but it's still a powerful position to be in with more shares than Freddy and significant boardroom influence which could force Shepherd's hand...

 

4) Am I alone in my belief that some sort of gentlemen's agreement exists that gives Shepherd first (or more pertinently last) refusal of the Halls shares? Such an agreement would certainly be a serious obstacle to any potential investors

 

I'm no economics or business management student - could someone with more knowledge or experience please explain to me (and other curious individuals) what the obstacles to new investors are if the Halls are ready to bail out?

 

[Lloydie]

I may get this a bit mixed up but...

 

1) There is a threshold at which once you've bought a given percentage of a company you have to make the same offer to the rest of the shareholders. I think it's 30%.

 

2) Yes, they'd have to offer the same. It's a law to do with protecting minority shareholders

 

3) Nothing, but you'd have to offer everyone else what you offered S&H, which will almost certainly be 20-30% more than the shares are worth since they'll expect a premium for relinquishing control

 

4) Any such agreement would be sorely tested if anyone put real money on the table

 

For the last part, should they want to sell the only problem is agreeing a price. They can always reduce their shareholding to the point where they're not the largest shareholder. 50.1% is what you need for control, but you can exercise practical control with much less if other shareholders are happy to let you appoint the board etc. It's how most companies actually operate and helps keep the executives honest.