Minority investors in Hemscott attack 'rip-off' terms of buyout

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The Independent Online

Minority shareholders in Hemscott, the financial information group, yesterday launched a scathing attack on its non-executive chairman Michael Grade, who is also the BBC's chairman, for claiming they were being ripped off as the company is taken private.

Hemscott announced it would make a tender offer through its broker, Seymour Pierce, to minority shareholders to buy their holdings at 40p a share, the average closing price in the 90 days to 11 January. The shares will be cancelled after being bought back by the company at the same price and delisted from AIM. The stock closed up 0.5p at 39.5p.

The move comes after Hemscott's controlling shareholder, the US private-equity firm Veronis Suhler Stevenson, decided to take the loss-making firm company. Together with the investment group FinMedia, Veronis Suhler owns 73 per cent of Hemscott. Their combined holdings will rise to more than 84 per cent after the conversion of a loan note, leaving a free float of less than 4 million shares.

A spokesman for Hemscott said: "Hemscott is in a position where it can't find anyone else who wants to invest in it. The cost of being on a public market is out of all proportion to its benefit."

Hemscott's biggest minority shareholder with a 5 per cent stake, Société Générale Asset Management UK, attacked the proposals, arguing that Hemscott is worth a lot more than the current share price. It said Mr Grade and the chief executive, Ros Wilton, should have fought for fair value for minority shareholders.

Hugh Sergeant, the UK growth fund manager at SocGen, said: "Minority shareholders are not being given a fair offer in this transaction."

He believes the shares are depressed but have the potential to rise to between 60p and 70p.

Mr Grade defended the move by saying that he had sought to protect minority investors from the prospect of the business being delisted without any tender offer and had allowed them an exit. Mr Grade is stepping down from Hemscott and will sell his 35,000 shares in the company.

He said: "The board has concluded that the business could be developed more effectively as a private enterprise and that the restrictions placed on it by trading on AIM may be limiting its growth prospects."

Hemscott said that when it sought to raise money from institutional investors a year ago to fund its acquisition of bigdough.com, there was no appetite for investing in it, so it was forced to finance the deal by issuing a convertible loan note to Veronis Suhler.

It also pointed out that shareholders could choose to stay with the company and perhaps benefit in future if it is sold or refloated. Ms Wilton is holding on to her 112,000 shares.

Hemscott looks after corporate websites for the likes of British American Tobacco and BT Group, and has its own subscription investor newsletter.