Background and business issues
Gladstone Plc was a leading supplier of leisure management software in the UK and Ireland.
The Canadian company, Constellation Software Inc., launched a failed hostile takeover of Gladstone in October 2008.
In 2010, Constellation increased its shareholding in Gladstone to in excess of 30% so was obliged to make a mandatory cash offer for the company in accordance with Rule 9 of the Takeover Code.
Our role and approach
The Deloitte Corporate Finance PLC Advisory team acted as Rule 3 adviser to Gladstone on Constellation’s Rule 9 mandatory offer.
A key component of our role was to advise Gladstone’s directors on the value of Constellation’s offer and whether they could recommend it to shareholders.
Both Deloitte and Gladstone’s directors considered that Constellation’s offer undervalued the company and that it should therefore be rejected.
We helped Gladstone’s directors draft communications with shareholders, advising them not to accept the offer.
Nevertheless, a core of Gladstone’s shareholders accepted the offer and it became clear that Constellation would gain control of the company. For the benefit of all remaining shareholders, the directors therefore changed the emphasis of their recommendation and Constellation ultimately acquired Gladstone.
Gladstone’s shareholders received 33p per share from Constellation (an approximate 30% premium to the share price before Gladstone entered an offer period).
Deloitte tried to increase the value of Constellation’s offer and found a potential 'white knight' bidder to help achieve this.
Due to shareholder acceptances of the Constellation offer being sufficient for Constellation to gain control of the company, the white knight bid was withdrawn, and Deloitte subsequently advised the board of Gladstone Plc to accept Constellation’s offer, at a higher price than the initial bid.