Thursday, 30 October 2008

Gladstone rejects Constellation bid approach

Unsurprisingly, yesterday leisure systems provider Gladstone rejected the unsolicited approach worth £13.54m from Canadian firm Constellation Software (see here for RNS).

At the same time, Gladstone announced that it had changed Gladstone changed its nominated adviser to Grant Thornton and its broker to Fairfax IS. Is this driven by a potential conflict of interest?

I note that up to July 2008 Gladstone’s broker was KBC Peel Hunter, when they swapped to Daniel Stewart – now they’re with Fairfax IS where former KBC Peel Hunt man Adam Hart works. So perhaps not.....

What happens next? As noted
previously, one would normally suspect that an MBO or another bidder would enter the running – the main problem being Constellation’s near 29% share holding - but I’m expecting Constellation to open discussions with the major shareholders to see if they can win this bid with a higher offer. Since my last post on this topic, I’m now doubtful that 28p will succeed, but if no-one else enters the battle, I suspect that an increased offer of around 30p will see Constellation win (and still get a bargain).

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