Independent News & Media has moved to fortify its defences against a possible bid by Denis O'Brien by buying more of its own stock and making efforts to empower its directors to withhold dividends from investors who do not provide information on the ownership of their shares.
The Sir Anthony O'Reilly-controlled group said shortly before the market closed last night that it had spent €4.36 million buying 1.15 million of its own shares at €3.795 per share.
After buying 1 per cent of its own shares last Friday at €3.77 per share, the move brought to €32.36 million the group's expenditure on its own stock in the past week. The shares closed down 5 cent at €3.78 last night.
The group has proposed sweeping changes to its internal rules on disclosure of beneficial interests in the business. Subject to the approval of an extraordinary general meeting (egm), investors will be obliged to inform the group within 14 days of reaching a shareholding threshold of 0.25 per cent of its issued capital or any multiple of that stake.
This is seen by stockbrokers as an attempt to closely monitor any effort by Mr O'Brien to increase his 7 per cent shareholding.
In addition, the group's directors would have the right to restrict payment of dividends and voting rights on shares if an investor does not comply with a request for information on the beneficial ownership of shares.
Asked whether this was designed to thwart Mr O'Brien, a spokesman for Independent said the changes were proposed to keep the group in line with other public companies and with the Companies Acts.
However, the renewed accumulation of shares and proposed changes to the group's disclosure requirements were characterised by a stockbrokers as evidence that Sir Anthony was preparing for a possible bidding war against Mr O'Brien.
"Without question, battle lines are being drawn," said one senior figure.
International corporate governance research firm ISS said in a note yesterday to its 1,600 clients that investors should vote against changes to Independent's disclosure requirements.
"Shareholders who fail to report changes to their shareholdings may have their voting and economic rights suspended for a period of several years, which ISS considers to be a shareholder-unfriendly practice. We also disapprove of a shareholding disclosure requirement of 0.25 per cent," the firm said.
"It is noted that the majority of Irish companies has a limit of 3 per cent. A lower level also requires a greater number of shareholders to disclose their ownership, causing a greater burden to shareholders and to the company."
The egm will take place immediately after the group's annual general meeting (agm) in a hotel near Belfast on June 13th. Also before the egm is a resolution to reduce the maximum number of group directors to 20 from 25 and others on the repurchase and issuance of shares.
These were endorsed by ISS, but the firm said in a note on the agm that investors should vote against the reappointment of group directors Peter Cosgrove, Joseph Davy, Senator Maurice Hayes, Liam Healy, Dr Ivor Kenny and Cameron O'Reilly.
ISS said the group's board did not contain the required number of independent non-executive directors as set out in the Combined Code for corporate governance in Britain. "The 26 per cent board independence does not meet our standards for a majority independent board," it said.
ISS provided its reports to The Irish Timesafter a request to the organisation.
