Congra changes tack with Global Graphics deal (Updated)

Congra Software is still planning to take over Global Graphics but has abandoned its original offer – which I’ve covered earlier, both with the initial announcement and a more in-depth report. Instead, Congra has opted for an altogether different approach.

This image shows the effects of banding on the left, and then with the Global Graphics’ ScreenPro software having removed the banding on the right.

Congra Software has just acquired 17.04 percent of Global Graphics’ shares, including 3.94 percent from Johan Volckaerts and 13.10 percent from Clema Capital Sàrl, which is also controlled by Volckaerts. For these transactions, Congra paid €4.25 per share, the price offered in its original acquisition deal, which Congra will pay in cash.

Guido Van der Schueren, who owns Congra, also owns Powergraph BVBA, which already holds 14.17 percent of the shares in Global Graphics. Consequently, Van der Schueren now has 31.21percent of the shares.

Under the UK City Code on Takeovers and Mergers Congra and Powergraph are considered to be “acting in concert” and since they now control more than 30% of the issued share capital of Global Graphics, Congra now has an obligation under the UK Takeover Code to make a general offer for the rest of the issued share capital of Global Graphics. 

Thus Congra Software will launch a mandatory offer for Global Graphics’ remaining share capital at the same €4.25 per share price as its original offer. On the face of it, this arrangement seems broadly similar to the original scheme.

However, Graeme Huttley, Chief financial officer for Global Graphics, says that the new approach is quite different. He explains: “The original method is a fairly common method in the UK for takeovers. It’s effectively a transaction between the company and its own shareholders. The company makes a proposal to the shareholders and those shareholders vote on that, and the majority decision then binds all the shareholders.” This means that the scheme either fails or succeeds and clearly Van der Schueren felt there was a good chance that it could fail.

In contrast, the mandatory offer is between Congra Software and each individual shareholder, meaning that at the end of the process Congra will acquire a certain percentage of the shares. Huttley adds: “If the bidder acquires 90 percent of the shares then they can do a squeeze-out, which forces the remaining 10 percent of shareholders to have to sell their shares.”

This approach also means that Congra Software is now in the driving seat, meaning that Global Graphics is no longer overseeing the process, though Huttley says that the company is quite happy with this.  In any case, we’re not likely to hear anymore about this now until January or even February because of the financial regulations involved. The deal will be subject to joint regulation from the UK Takeover Panel and the Belgian FSMA as Global Graphics is based in the UK but its shares are listed on the Euronext exchange in Brussels.

You can find further details about this proposed takeover on the Global Graphics website here.

(This story has been updated on the 30th November to explain the differences between the original and the new mandatory offer)

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