The APN News & Media shareholder meeting in Sydney on Friday was always a pointless exercise once ASIC forced Perpetual to reveal it would be voting 11.7% of the company’s shares against the private equity/O’Reilly family privatisation bid.

I went in with an open mind but ended up voting against the $3.8 billion offer after listening to the debate. For starters, lead independent director Ted Harris, refused to reveal the proxies, even though he knew that the deal had buckley’s chance of succeeding.

Indeed, the figures show that the $6.20 offer was actually behind on the proxies and only crept up to a 51-49 majority after Ted used most of the 4.82 million open proxies to support the resolution. This was still well short of the 75% super-majority required, although 80% of shareholders did support the deal after quite an aggressive solicitation campaign.

The meeting was still pretty lively with the most interesting revelation being that just one director revoking his endorsement of the deal would have been enough to trigger the $27 million break-fee. No wonder they stuck by a miserable 3% increase in the bid price when the market was up almost 20% over the 5-month bid process. However, it remains very ordinary that they tolerated abandoning the final dividend, which was today revealed to be 20c.

Jack Tilburn delivered an incoherent rave against Perpetual for denying him the chance to receive $6.20 for his 20,000 shares. As the owner of 3 Perpetual shares, I pointed out that it is the most profitable listed fund manager in the world in terms of return on equity and now manages close to $40 billion very competently.

The consortium treated institutional investors pretty arrogantly and Tony O’Reilly didn’t even bother to get on a plane and visit Australia to meet with them.

Perpetual has been vindicated because all this talk of APN shares tumbling if the bid failed proved wrong as the stock gained 7c on Friday and then another 10c to $5.97 this morning, on expectations the consortium will come back with a better offer.

Rejecting private equity can be highly profitable. Solly Lew collected $6.20-a-share for his Colorado stake after initially rejecting the $4.70 offer from Affinity Equity Partners and Flight Centre is now trading at $18.08 after institutions voted down the original $17.30-a-share offer.

Even Qantas is up another 12c to $5.78 this morning so there isn’t anyone who has lost out from rejecting a private equity bid so far.

Peter Fray

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Peter Fray
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