ONE OF the country’s leading television and film production companies, the makers of major movies like Lantana and the Mythbusters series, has made two competing takeover offers with Freehills as its advisor.
The firm has advised Beyond International Ltd on its two takeover offers, one from ASX listed Mariner Financial Ltd and the other from Asian private equity fund Navis Capital. Beyond received a takeover offer from Mariner at $1.15 a share in September. It later announced that it had agreed to proceed with a scheme of arrangement proposal with Navis at $1.22 per share. Mariner then raised its takeover offer to $1.25 a share, which valued Beyond at $74.6 million.
Lead partner on the deal, Rick Narev, told Lawyers Weekly that a bidding war began over the production company after the Federal Government brought in some new tax concessions relating to the film and television production industry, making Beyond an attractive target for many people — including private equity and industry players.
Freehills’ mergers and acquisitions team, including senior lawyer Kate Logan, found the deal interesting in that two of the directors of Beyond and the chairman, who were founding members from when it first listed on the ASX, are also directors of Mariner.
Narev said the firm then had to deal with the usual conflict of interest-type issues, but in this deal that was enhanced by these directors. He said there are two ways to deal with these types of conflicts of interest.
“You know if management or any major shareholder has a director who is involved in the other side of it that they should resign immediately. They’ve been trying to bring these rules in and of course that is completely impractical in a lot of cases because here we had two directors who had connections with about 80 per cent of the Beyond shareholders and who provided incredible value and input into what the shareholders’ feelings were, what they were likely to accept. If we’d told them to resign from the Beyond board, we would have just lost all of that,” Narev said.
“So I’m more a fan of looking at the legal rule which is: is there going to be a conflict and breach of directors’ duties and does any director have a material personal interest. Because if they have a material personal interest then they’re not allowed to be present during board discussions,” he said.
The firm set up a protocol to ensure none of the directors had a material personal interest in the Mariner bid. Narev argued that just because they’re directors of both companies does not mean they have a personal interest.
The lawyers then we had to make sure the directors didn’t have conflicting directors’ duties between the two companies. Where it did occur however, the firm had to manage the information flow. “So we basically brought in the rule that everything we tell you we are happy for you to tell Mariner. So we managed the information flow so that they had enough information so that they could help but if they passed that information onto Mariner, then that didn’t cause us any damage. So that’s the system that we set up,” Narev said.