- Daily Mail and General Trust shares are recorded as 75% down
- DMGT is quoted, but there is significant ownership by trusts associated with Viscount Rothermere’s family
- This is actually a technical change in the shares
Daily Mail and General Trust (LON: DMGT) shares are being recorded as 75% down on the completion of the successful takeover bid. This is, to put it mildly, more than a bit weird. It would not be usual for a share price, like that of the Daily Mail owning company, to fall precipitately when a takeover bid succeeds. For that to happen the bid would have had to be at very much less than the current market price and then people would accept it.
This isn’t how the market does behave – not even when considering the Daily Mail. So, that 75% decline in the share price at DMGT does need explaining given the success of that bid.
The background here is that DMGT is quoted, yes, but there is also significant ownership by varied trusts associated with Viscount Rothermere’s family (in such things as “Roithermere Continuation Ltd” and so on). As is not unusual with certain heritage companies there’s more than one class of shares in issue in DMGT. There are those that belong to the founding family and so on, which have one level of votes, those that are more generally on the market and have another level of voting power.
Those that are quoted are the DMGT A shares. Which were yesterday at £10.60 and the like. This morning they’re at £2.68 which is a 75% fall.
No, it is not true that DMGT shareholders have all lost their shirts overnight. This is actually a technical change in the shares themselves and how the quotation is calculated.
The terms of the offer can be seen here. The announcement that the DMGT bid is now unconditional is here.
The actual bid is that the Rothermere interests buy up the outside – and market – shareholders and return DMGT to being a fully private company. As with any such bid once acceptances have gone over 50% of the shares then the bid is unconditional. The company is going private.
For shareholders there then is a necessary decision to make. It’s entirely possible to say that you don’t want to sell. But if not then you’ll have stock in a private company and there will be little to no liquidity. That might not be the best idea. The other alternative is to collect the £2.70 per share on offer and invest elsewhere. That may or may not be a better idea.
From the ticker, we might assume that this sell or be part of a private company has dropped the DMGT price from over £10 to that £2.70. This is not quite how it is working. For if it were of course no one holding the £10 shares would have agreed to it. What is happening is that the DMGT A shares convert into a slightly different instrument – or rather, the quotation has switched.
There really hasn’t been a 75% decline in the valuation of the Daily Mail, nor of shareholdings in DMGT as a result of the success of the takeover bid. This is, instead, a glix in the matrix of which instrument is being quoted and how as a result of the success of the offer to take DMGT private.
