The flights were booked, flyers drafted and lines prepared when at 6.20pm last night, Tattersall’s distributed a press release announcing it was changing the terms of its $4 billion merger with Unitab and delaying the Unitab shareholder meeting in Brisbane, which was due to start at 2.30pm this afternoon.

So, the Tattersall’s board caved in after a five month process, less than 24 hours before the final shareholder vote. What could possibly have triggered this change of heart? Clearly, the Unitab shareholders were going to vote the deal down, yet this information has not been publicly disclosed, as you can see in the Unitab announcement.

Normally about 95% of all votes in corporate elections are cast as proxies, and proxy voting for Unitab shareholders closed at 2.30pm on Friday. The Unitab board was told exactly which major shareholders were voting against the deal, so there would have been some last minute arm-twisting over the weekend.

It remains one of the quirks of corporate elections in Australia that board-sponsored resolutions are rarely formally defeated, they just get withdrawn. This is acceptable if it happens relatively early in the voting process, such as AMP’s withdrawal of two inappropriately generous executive incentive proposals during its 2003 financial crisis. The same goes for Southern Cross Broadcasting when it withdrew a proposed increase in retirement benefits for directors five days before the 2001 AGM, as you can see here.

However, what happened yesterday isn’t acceptable because the decision to delay the Unitab vote and change the merger terms was taken after proxy voting had closed, so the ASX should force Unitab to disclose the proxies to the market. Imagine if this sort of thing was tolerated in political elections. The political equivalent would be the Republic Referendum being extended after the polls had closed but before the votes were announced with a new model adopted for a subsequent vote a few weeks later.

Tattersall’s only floated last year but already it has a history of proposing resolutions that get withdrawn pending certain defeat. In fact, former director Peter Kerr resigned from the board last year during the 48 hour window between the closure of proxy voting and the start of the AGM. Once again, he got to see the proxies and then withdraw, thereby ensuring the scale of his unprecedented defeat was never made public.

Rio Tinto did the same at this year’s AGM in March when it announced the withdrawal of a resolution changing its constitution but refused to disclose the scale of the defeat. Another company which pulled this trick was Hills Motorway, which announced the retirement of director John Cassidy one day before the 2004 AGM.

We’ll endeavour to come up with a list of board-sponsored resolutions that have actually been formally defeated, but at this stage I’m only aware of the proposed Lend Lease-GPT merger last year. If there have been others, please email [email protected]

Peter Fray

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