Outlook: Ashcroft lesson in acquiring by mirrors

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WITH TWO botched profit warnings under its belt, the board of Corporate Services Group is clearly not up to much, which is why the three main shareholders have lost patience and requisitioned an emergency meeting to get rid of the chairman, commercial director and three non-execs.

But not even a board blessed with the wisdom of Job could be expected to get its mind around the takeover bid sprung yesterday by the Florida- based Michael Ashcroft, who, among other things, also happens to be Tory party treasurer.

Here is a sample from the terms of the offer (appendix 3). "The Additional Cash Element will be calculated by Rea Brothers Limited for each Corporate Services share as the lower of 32.31p and the product of the following (rounded down to two places of decimals):



Where: P is the aggregate of the proceeds of sale, less expenses, of all the Tyco shares transferred by Portland (converted into sterling, if appropriate) and any cash subscribed by Portland pursuant to the placing and N is the number of Corporate Services shares to which the Offer relates."

Got that? Of course, the poor old souls at Corporate Services haven't which is why their advisers gamely responded yesterday by asking for a meeting with Mr Ashcroft "in order to gain a better understanding of the consideration being offered and the terms of the offer".

Shareholders are, meanwhile, strongly urged to take no action. Too late. Schroders, MAM and M&G, who control 31.6 per cent of the shares, have already rejected the offer and are pressing ahead with their scheme to evict the board.

Even in its simplest form the Ashcroft offer is fiendishly difficult to understand, which is almost certainly deliberate. One Belize-registered company merges with another Guernsey-registered company and then raises money by issuing shares to another company (all three being controlled by Mr Ashcroft) which underwrites the share offering using the Ashcroft stake in a fourth company.

Corporate Services was falling in value by the day until the Ashcroft bid popped up and even now it is hard to know what the business is worth. But it is easy to see why the three main shareholders are not keen on swopping their investment for shares in an offshore company controlled by a single shareholder who goes to such convoluted lengths to confuse his trail. One just wonders what William Hague makes of it all.