Update: Third Point Investors (TPOU) has won shareholder approval for its controversial acquisition of Malibu Life, angering the rebel investor group which accused it of ignoring the wishes of independent shareholders.
At an extraordinary general meeting on Thursday, 66.67% of votes cast were in favour of the reverse takeover that will see Dan Loeb’s £329m global multi-asset fund become a player in the US fixed annuity market.
However, a third, or 33.33%, of votes were against the deal, suggesting the group of dissident investors led by 7% shareholder Asset Value Investors with Evelyn Partners, Almitas Capital, Staude Capital and Metage Capital had gained further support. In addition to their total holdings of 14%, they previously reported having the backing of a further 10% of shareholders taking their total support to 24%.
The main objection of the Third Point Investors Limited Investor Group had been the absence of a 100% exit at asset value for shareholders given the complete change in remit. Third Point had improved its offer, lifting the amount shareholders could sell to $136m from £75m, or to 24% of net assets from 13.5%. The overall exit price was also improved to an implied 5% discount to net asset value (NAV), although the initial return of capital would have been 12.5% below. TPOU shares trail 25% below asset value.
The investor group had urged VoteCo, an entity established by Third Point for US regulatory reasons, to abstain from using its 40% voting rights. That appears not to have happened given the size of the vote in favour.
Analysis by the investor group showed that none of the eight resolutions would have attained their 50% or 75% approval hurdle without VoteCo support. For example, adjusted for the manager’s stake the first resolution achieved only 45.8% support from independent shareholders versus 54.2% against.
“The group is deeply concerned by the way that today’s outcome has been reached. As these EGM results make clear, these changes have been conceived, developed, and now forced through by Third Point, the board and VoteCo, with independent shareholders merely as passengers.”
It complained that VoteCo had declined to meet with the group, a point that surprised TPOU’s joint corporate broker Deutsche Numis. Having previously expressed concerns about the merger on governance grounds, given the unusual voting structure and larger manager stake, Deutsche Numis analyst Gavin Trodd said the decision not to meet the group was “very odd” given VoteCo “was established with an objective to vote in the best interest of ordinary shareholders as a whole”.
“We reiterate our view that in the event of a material change in investment policy, which this clearly is, all shareholders should be offered a full exit close to NAV,” said Trodd
Nevertheless, TPOU’s chair Rupert Dorey believed the company had gained valid support for the transaction but would continue to engage with shareholders. He said: “Following extensive consultation with our shareholders, the board is delighted that a significant majority agree that the combination with Malibu represents a unique opportunity to bring a high-quality reinsurance platform to the London market that has the potential to deliver superior value for investors.”
The meeting also saw non-executive Richard Boleat elected as senior independent director in a board reorganisation to reflect the Malibu transaction.
Our view
James Carthew, head of investment company research at QuotedData, said: “We fundamentally disagree with ramming this vote through against the wishes of minority investors. The board and Vote Co have failed to protect those shareholders’ interests and deserve the criticism that they now face.”
James Carthew will discuss the topic further this morning in our In The Hot Seat show at 11am. Register here.
