ICG management buyout undervalues ferry operator by 39%, shareholder claims
A senior shareholder has criticized the proposed management-led buyout (MBO) of Irish Continental Group (ICG), arguing that the €1.2 billion bid undervalues the ferry operator by up to 39%. The offer, led by CEO Eamonn Rothwell and other senior managers, includes a 28% premium over the stock price prior to the announcement. However, several institutional shareholders, including Oxy Capital and Marathon Asset Management, have objected, claiming the deal prevents them from adequately discussing their concerns. Oxy Capital argues the valuation is too low and criticizes the urgency of the transaction, suggesting alternative strategies like debt financing or share repurchases could better serve shareholders. ISS, a shareholder advisory firm, supports the bid, calling it an attractive option for immediate liquidity.
Major shareholders in Irish Continental Group (ICG) have expressed opposition to a proposed €1.2 billion management buyout, citing concerns that the valuation undervalues the company. The plan, led by Chief Executive Eamonn Rothwell, involves the purchase of the ferry operator by management and key executives, including Rothwell, who owns 21.7 percent of the business. Other senior managers collectively hold an additional 2 percent of shares. This move follows a previous unsuccessful attempt by Rothwell to secure a management buyout nearly two decades earlier. Investors such as Marathon Asset Management, Janus Henderson, and Pageant Investments, which together hold approximately 11 percent of ICG's shares, have voiced their disagreement with the deal. These entities, along with Equus Global and Oxy Capital, reportedly wrote to the company to challenge the perceived low valuation. Each investor is acting independently, and there is no indication of coordinated action. They argue that the €8-per-share offer represents a 28.2 percent premium over the company’s stock price on July 24, but believe this fails to account for the broader financial picture. ICG has cited an enterprise value of 9.8 times its projected 2025 earnings before interest, tax, depreciation, and amortization (Ebitda). However, some minority shareholders question this figure, pointing out that disruptions on the Dublin-Holyhead route last year impacted Ebitda levels. Additionally, they highlight that the company’s net debt of €256 million at the end of 2025 reflects a peak borrowing period due to recent acquisitions, including the James Joyce ferry and preparations for full ownership of its fleet. It is anticipated that net debt will decline significantly following these developments. Concerns have also been raised regarding the lack of an option for non-management shareholders to convert their holdings into equity within the new entity. Some investors feel this exclusion undermines fairness. Furthermore, the timing of the extraordinary general meeting (EGM), scheduled for August 28, has drawn criticism. Many investors are expected to be away on holiday during this period, potentially limiting their ability to fully engage with the proposal. Discontent among ICG shareholders mirrors similar frustrations observed in other companies undergoing takeover bids, such as PTSB and DCC. PTSB recently secured 91.3 percent shareholder support for its acquisition by Austrian lender Bawag. However, uncertainty persists regarding whether a separate vote involving minority shareholders alone will be necessary, given the government’s 57.5 percent stake influenced the outcome. At the EGM, 36 percent of minority investors opposed the transaction, though the deal requires High Court approval through a scheme of arrangement. In another related case, investors in DCC, including Fidelity International, founder Jim Flavin, and Aviva Investors, have indicated they will not back the €6.69 billion bid by U.S. private equity firms KKR and Energy Capital Partners. This highlights growing skepticism toward large-scale buyouts, particularly when they appear to overlook the interests of existing shareholders. As the situation unfolds, the focus remains on the legal and procedural steps needed to finalize the ICG deal, with ongoing scrutiny from both minority shareholders and regulatory bodies.
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