Telit Communications PLC - London-based company that focuses on software for the 'internet of things' - Berry Street Capital Management LLP expresses disappointment at board's recommendation of cash offer from largest shareholder, DBay Advisors, "at a price that even the board recognises undervalues Telit and its longer-term prospects". Berry owns over 1% of Telit.
"The Telit board has justified this recommendation by, amongst other things, the fact that 58% of Telit's share capital supports the acquisition. This fails to highlight that, of that 58%, over 41% is owned by the bidder, the CEO and other shareholders who will be accepting the unlisted stock alternative offer and will be able to continue to benefit from any subsequent increase in the value of Telit. This unlisted stock alternative is unable to be held by most of the independent minority shareholders and, as the board recognises, is unrecommendable for minority shareholders to accept," says Berry.
"Yet again, the board of a UK listed company has recommended an offer structured as a scheme of arrangement at a valuation that does not reflect the true value of the company, with a stock alternative that is not a true alternative for the majority of independent shareholders. In our view, when such a structure is contemplated, the board's fiduciary duties should be focused solely in protecting the rights of the minority holders who are only able to accept the cash offer and should not be swayed by the desires of the few shareholders who are party to the creation of such an unfair structure," it adds.
Current stock price: 226p
year-to-date change: up 15%
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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