Treasury Holdings, the property group owned by John Ronan and Richard Barrett, has succeeded in gaining control of Real Estate Opportunities (REO), the listed company it founded as a split capital investment trust four years ago.
The property duo's shareholding in REO will rise to a controlling 56.5 per cent from 35.5 per cent following the sale of two Treasury properties to REO in return for a mix of cash and shares to be issued at a price of 58.5 pence (85.2 cent).
The properties were at Barrow Street in Dublin and in Balbriggan.
The two properties will be sold for €73.76 million. REO will pay €3 million in cash and the balance in shares to Treasury and its joint-venture partners in the Balbriggan property.
While Treasury will retain its shares, thereby increasing its stake in REO, the 14 million new shares being issued to its joint venture partners in the Balbriggan property - understood to be two individual Irish investors - will be placed with institutional investors.
In total, some 59 million shares are to be placed with investors at 58.5p each.
In addition to the 14 million shares being issued to the Balbriggan partners, the placing includes 45 million shares currently held by British investment group Dawnay Day and solicitor Noel Smyth.
The balance of their shareholding, some 34 million shares, will be repurchased by the company at a price of 58.5p each and cancelled.
Dawnay Day and Mr Smyth, dissident shareholders who built up a 40 per cent stake between them that threatened Treasury's hegemony within REO, agreed to sell their stake for £46 million last month. This followed long-running tensions between them and the REO board over the dominant role in REO played by Treasury.
Paul Fincham, of company broker Teather & Greenwood, denied that the move was "a creeping takeover" of REO by Treasury.
He noted that Treasury had indicated that it would look to reduce its shareholding to 50.1 per cent, while it had also entered into an undertaking not to exercise its votes "in such a way as to compromise the ability of the company to carry on its business independently of Treasury Holdings".
The agreement is understood to relate to matters such as board composition and precludes certain related-party transactions.
"It's a standard agreement that regulates the relationship between a controlling shareholder and a company," Mr Fincham said.
The UK Takeover Panel has approved the increase in the Treasury stake, subject to the approval on a poll of independent shareholders at an extraordinary meeting to be held on May 5th.
However, the stake held by Treasury, Mr Barrett and Mr Ronan has been capped at 56.9 per cent.
Above that level, they will be forced to make a mandatory cash offer for the company.
Meanwhile, Teather & Greenwood said that the properties being acquired by REO sat well within its portfolio and had been subject to independent scrutiny.
"The properties being acquired have ultimately been approved by the independent board members, acting on the advice of the property manager, Invesco, who commissioned on behalf of the company independent valuation reports on the properties," Mr Fincham said.
REO has extensive property interests in the Republic, including the Stillorgan Shopping Centre in Dublin, property on Baggot Street in Dublin's city centre and in Clondalkin, while it also owns the property occupied by Marks & Spencer in Cork.
Following a disposal programme in Britain, it retains just two property investments in the UK with a total value of £5.75 million.
