The City’s Takeover Panel needs to get a grip

 
David Hellier
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WHEN Omega Insurance decided five years ago to redomicile to Bermuda, I would think it unlikely that many shareholders gave much thought to how the company would be regulated from here on in, specifically in regard to being within the remit of the City’s Takeover Panel. But in the past few days many of them have had cause to reconsider the implications of that move.

Omega has been in the throes of lengthy takeover discussions and recently appeared to be on the way to agreeing a deal that would see the group effectively in the control of Mark Byrne, an insurance entrepreneur who also happens to be the godson of Warren Buffett.

Byrne, with the encouragement of the group’s board, put in an offer for up to 25 per cent of Omega’s shares. His offer, on which he was advised by Citi, was an unusual reverse tender which envisaged him paying up for shares in a price range. The more investors agreed to sell at a lower price, the less he would have to pay.

Sources close to the deal say that Citi gave Byrne confidence that he would be able to buy the majority of the shares at the low end of the range. But the tender actually finished with virtually all shareholders agreeing to sell shares only at the top end.

Just before the offer closed, Byrne let it be known that his offer was set to lapse because it had all along been conditional on various regulatory clearance being given, which had not been completed.

Shareholders are now in a mess. One top ten shareholder says the whole thing is a farce. “We’re waiting to hear back from the company but it’s been 12 months now since Omega first announced it had had a takeover approach and we’re still waiting for something to happen.”

Bankers close to the deal are convinced that this impasse would not have happened if Panel rules had applied and the Panel had been able to bang heads together. They worry that other companies such as Hardy Underwriting (also the subject of a bid) have redomiciled.

The Panel should surely consider a change in its remit so that all UK-listed companies come within its purview.

At the moment its view seems to be that “you’re either in or you’re out”, and that shareholders in companies that change their domicile know the risks.

While that may be so, UK financial markets can do without too many more Omega Insurances.

david.hellier@cityam.com