Polygon scuppers takeover at Telent

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The Independent Online

Mike Parton, chief executive of Telent, the rump of the old Marconi business, has missed out on a £9m payoff after US hedge fund Polygon held firm over its decision to block the £346m takeover of the company by Fortress Investment Group.

Yet despite Mr Parton's insistence that there were no other bids on the horizon, the share collapse he predicted earlier in the week failed to materialise, prompting speculation that Fortress may return with a bid acceptable to Polygon.

Mr Parton was due to leave with a handsome windfall, constituting a £820,000 termination payment and around £8m in share options. He attacked Polygon, Telent's largest shareholder, arguing that the issues the US hedge fund had raised when blocking the deal "had no merit".

Mr Parton, whose future at Telent is now uncertain, said: "This was the only offer we have ever had. We are not going to go into perpetual deal mode." Earlier this week he predicted that shares would collapse if the deal fell through. Yet shares closed yesterday 1.2 per cent higher at 490p, still below Fortress's offer of 529.5p a share leading to speculation that Fortress could return.

Telent recommended the Fortress bid in May but was unable to convince Polygon to support the deal over a series of meetings. Polygon holds a 24 per cent stake in the company and argued that the deal undervalued the Telent business. It tried to join Fortress in the bid before declaring its intention to block the deal.

"This deal is dead. There is no other deal to replace it," said Telent chairman John Devaney at the thinly attended extraordinary general meeting in London. He argued that Polygon wanted to get its hands on funds that are held in an escrow account that was put in place to ensure Telent's pension plan meets its obligations over time. He said: "I don't believe the regulators, nor the trustees, would allow that to happen. It's just not feasible."

The escrow account had a balance of around £390m at the end of June.

Telent needed 75 per cent of its owners to support the deal, but a poll conducted after its EGM yesterday showed that over 40 per cent of participating shareholders voted against the deal. Over 40 per cent of shareholders failed to vote on the takeover at all.

Mr Parton said now the takeover had been blocked, Telent would focus on running the business. Asked about future relations with Polygon, Mr Parton said: "We are obliged to treat all shareholders equally."

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