(Alliance News) - An independent review has found Management Resource Solutions PLC's takeover of Alerion Consulting Ltd was not a "sham transaction".
MRS opened the review, carried out by Memery Crystal LLC, into the GBP1.3 million March deal in May, following concerns from shareholders, who have since tried to remove Non-Executive Chair John Zorbas and Finance Director Timothy Jones.
The move failed, but Zorbas has since said he will leave in August.
One of the concerns was over potential conflicts of interest regarding the independence of the sellers of Alerion, as well as the involvement of MRS shareholder Leon Hogan.
"Memery Crystal is of the opinion the process of the acquisition of Alerion, which took several months, was appropriate and the negotiations were conducted at arm's length, although Memery Crystal has identified a number of matters and has provided recommendations to address these issues," said MRS.
"The report further states the documentation appears to be adequate and appropriate for the size of the transaction, and that due consideration seems to have been given by the board to the process of an internal valuation of Alerion and to the advice of a solicitor who advised MRS on the acquisition, and who appears to have participated in the transaction to an appropriate extent."
Memery said MRS was introduced to the sellers of Alerion in autumn 2018. The company considered other deals, but decided they did not fit, and Memery has found the board of MRS was kept fully informed once negotiations started. They were led by Chair Zorbas.
Memery has, however, told MRS to strengthen its policies and procedures regarding inside information, having not told shareholder Hogan he could be considered an insider.
No evidence of a material conflict of interest was found, MRS continued, and Memery does not believe Hogan to be a "shadow director" of MRS, though the law firm did say some third parties were unaware of Hogan's position and that he could have acted beyond what was appropriate for a shareholder.
MRS Chief Executive Paul Benton commented: "The board of MRS has always maintained Alerion represents an acquisition that is expected to replace services currently outsourced by the group, complementing our service offering and enhancing the industry-leading services we offer to our customers.
"At the same time, we recognise some of our shareholders had concerns and are therefore pleased this independent legal review has shown the transaction process to be appropriate and there was no conflict of interest between the parties involved."
"We have reviewed Memery Crystal's recommendations and accordingly we have already started to implement measures to ensure the company's governance, policies and procedures are in accordance with best practice," he added.
MRS shares were 0.9% higher on Tuesday afternoon in London at 2.88 pence each.
