LONDON (HedgeWorld.com)–Polygon, the activist hedge fund, succeeded today in blocking a ?346 million ($654 million) bid for Telent, the rump of Marconi, the telecom equipment maker. Polygon is the biggest shareholder with a 24% stake held through its Global Opportunities Master Fund.
Fortress Investment Group, a U.S. private equity firm, had bid to take the company private, a move that was supported by Telent management. Mike Parton, the Telent chief executive, would have made nearly ?9 million had the sale gone through. The deal had backing from other hedge funds and institutional investors.
Though an extraordinary shareholders meeting voted 58.7% to 41.3% in favor of the deal, that margin failed to meet the 75% threshold required to make the offer binding under the scheme of arrangement through which the takeover was structured. Just fewer than 60% of shareholders cast their ballots.
“The board believed the scheme offered attractive value to shareholders and, therefore, regrets this result,” Telent said in a press release. “The board will continue to implement its business plan to position the company as a leading communications services business focused on the telecommunications and enterprise markets in the U.K. and Germany and is confident that it has the strategy to grow the business successfully.”
Fortress can’t revisit its existing bid for 12 months under the rules of the United Kingdom’s Takeover Panel. It could, however, raise the ?5.29 ($10) per share offer at any time with a new bid.
After the vote was announced on Aug. 4, Telent stock slumped 4% but quickly recovered to close 1.2% higher at ?4.90. Despite expectations in recent days that the Fortress offer would fail, several funds have built or opened long positions.