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Shareholders R Us

When Premier Asset Management chief executive Mike O’Shea spoke about the board’s decision to accept a £51.9m management buyout of the business he could hardly have envisaged the way events would have panned out over the next few weeks.

At that time all seemed rosy as the group’s management looked to follow in Gartmore and Jupiter’s own footsteps and ensure that they had control of their own destiny by pairing up with private equity firm in the shape of Electra Partners.

At the time O’Shea said one of the biggest reasons behind the decision was that the group needed to have the autonomy and the ability to fend of bids from other quarters, particularly as most businesses are at the whim of the equity markets should they decide to fall.

Less than a month later and O’Shea’s foresight could put Nostradamus to shame, for not only have shareholders decided against the MBO by the time of the firm’s initial deadline, but also the equity markets have decided to tank to the point that they are putting pressure on the glass ceiling that is 6,000 on the FTSE100.

Worse still, only 40.47 per cent of shareholders voted in favour of the MBO, less than half of the 90 per cent majority the group had initially sought, while opposition from shareholders, including Water Hall Group and Unicorn Asset Management’s Peter Webb, who owns 9.5 per cent in the Eaglet Investment Trust, have made their discontent, and subsequent opposition to the move, known to the public.

Where does this go from here? Well Premier has issued a secondary deadline for shareholders, while it is understood that the majority shareholding is likely to drop from 90 per cent to between 70 and 75 per cent.

However, O’Shea’s fears must now be becoming a reality if he truly believes the firm could be at risk from falling markets. Prior to the shareholder vote on Monday, he said: “The level of merger and acquisition business going on in the financial services sector was concerning management.

“The asset management industry is cyclical so there is a certain dependency on the performance of the equity markets and, to an extent, we are at the behest of them, especially if markets struggle and we become subject to a takeover.”

Premier will undoubtedly want this sorted out quickly. As for those who oppose, they have their own agenda and could spark a rival bid.

If that is the case and the managers do not get their they may make their decision and vote with their feet.


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