2nd UPDATE: UK Regulator Bans 3 From Deals For Breaking Rules

14th Jul 2010 18:22

(Adds comment.) By Margot Patrick Of DOW JONES NEWSWIRES LONDON (Dow Jones)--The U.K.'s Takeover Panel, in charge of overseeing company mergers and acquisitions, Wednesday banned three men from getting involved in any merger deals for three years after finding they broke market rules while attempting to regain control of an investment company. The sanction is only the second time in more than 40 years that the Takeover Panel has used a so-called "cold-shoulder" order. The panel found that Brian Myerson, former chief executive officer and a major shareholder in Principle Capital Investment Trust PLC, in March 2009 led an effort with PCIT director Brian Padgett and private investor Daniel Posen to buy enough shares in PCIT to reverse the results of a shareholder revolt that ousted Myerson and Padgett from the company's board. Their combined shareholding was above the U.K. threshold of 30% that triggers a mandatory takeover offer for an entire company, but no such offer was immediately made, putting them in breach of the U.K. Takeover Code. Myerson and Padgett went on to regain control of the company and later launched an offer for the shares they didn't own in June 2009. Myerson in a statement said shareholders actually made more money from that later offer than they would have at the time of the March dealings, and that the matters raised by the panel "are wholly wrong and misguided." "I did not break the Takeover Code in any way and I totally refute any suggestion that I did. I will continue to fight and defend myself and my reputation by all available means," he said, adding that he is examining his legal options and might contest whether the panel exceeded its authority. A lawyer representing Padgett didn't immediately return a call for comment. The law firm working for Posen declined to comment. The Takeover Panel found the three men each "sought to cover up the breaches involved and deliberately sought to mislead and persisted in misleading the Executive and the Committee about what happened." The only other time the panel issued a cold shoulder sanction was in 1992, when two large shareholders in Dundee Football Club were found to have acted together to take control of the club without making a full bid. The orders prevent any regulated firm from acting for the banned men on any share purchases or sales in a company involved in a takeover situation. The PCIT decision was made earlier this year but wasn't made public while an appeal to an independent body was pending. That appeal, as well as a claim that due process for the appeal wasn't followed, was rejected Wednesday and the 56-page decision was published. Myerson had lost control of PCIT after hedge fund QVT Fund LP, run by New York-based QVT Financial LP, formed a shareholder group that voted out the executive directors on the board and elected to change the company's investment adviser, another Myerson company. Later Wednesday, Boston-based Weiss Asset Management called for Myerson's immediate resignation as director from Sirius Real Estate Limited (SRE.LN), an AIM-listed company in which Weiss has a 20.67% stake and which is managed by Principle Capital Sirius Real Estate Asset Management where Myerson is chairman. -By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451; [email protected] (Marietta Cauchi contributed to this item.) (END) Dow Jones Newswires July 14, 2010 13:22 ET (17:22 GMT)