LONDON: The UK’s Takeover Panel has banned 10 individuals from merger activity after concluding they used sham transactions to mislead shareholders in the holding company that owned the Liberty department store and Malmaison hotels.
The group has been banned for periods spanning from one to five years for concealing the size of a stake effectively held by executives in 2010 at MWB Group Holdings Plc. The firm went into administration in November 2012.
The punishment – known as cold-shouldering – is the most severe sanction available to the watchdog and rarely used.
In the regulator’s 56-year history, only eight people had previously received the punishment, which prevents those sanctioned from working with any company on a UK merger under Britain’s takeover code during the period they’re banned.
“Today’s ruling concludes the most complex investigation in the panel’s 56-year history,” Omar Faruqui, director-general of the Takeover Panel, said in the statement.
The 10 sanctioned people “misled MWB Group shareholders and the market through a web of sham transactions and false trails stretching across many jurisdictions”.
Along with his five-year ban, Richard Balfour-Lynn, the hotelier who was MWB’s chief executive officer at the time of the alleged misdeeds, is liable to pay, along with two other executives, as much as £33mil (US$42mil) plus interest in compensation to MWB shareholders.
The ruling “relates to matters that took place nearly 15 years ago when the retail and property company Marylebone Warwick Balfour was facing imminent collapse as a direct result of the 2008 financial crash,” a representative for Balfour-Lynn said in a statement.
Balfour-Lynn lost his entire investment when the business folded and is proposing a £2mil Individual Voluntary Arrangement, which “he believes is the only practical way to provide compensation to any eligible former shareholders of MWB.”
Parties must report when they are working in concert and aggregating their interests so the panel can determine if the minimum 30% threshold of voting rights has been reached to require a mandatory bid be made. — Bloomberg
