SHAREHOLDER: Vas Kolesnikoff
From: The Australian June 09, 2011
I LOVE it when a shareholders action group contacts me. Not because it means there is trouble but because the shareholders are doing what they are supposed to be doing, and what fund managers already do.
Shareholders action groups comprise small individual fund managers who pool their shares behind a larger united voice in decision making. So I wonder why all these small individual fund manager shareholders don't join the Australian Shareholders' Association, while acknowledging some already have, because that's what the ASA is about and there is already a big action group in place, ready and waiting.
Cellestis is a great story and a great little biotech company. Its two founders, Tony Radford and James Rothel, deserve the glory for turning a small Australian tuberculosis diagnostic kit maker into a $350 million company, with regulatory approval for its product to be sold in some major markets like the US and Japan. This company can dream about following in the footsteps of CSL, Cochlear and Resmed.
The problem is Cellestis is now subject to a takeover offer from German company, QIAGEN. The founders want to accept the offer and cash in their chips. The company will be absorbed into something bigger where they can concentrate on science rather than management, ASX listing rules and all that other good stuff.
The shareholders want to stay with the founders, however, as they believe the offer price of $3.55 grossly undervalues the company's huge potential.
Shareholders are being asked to sell the company to offshore interests perhaps prematurely, before the company has had the chance to realise its potential and before shareholders have realised the value they believe is there.
The chairman, Ron Pitcher, notes that Cellestis's revenue growth will be accelerated as part of QIAGEN. However, this is cold comfort for shareholders who will lose this opportunity. Perhaps it also reinforces what a great deal this is for QIAGEN.
At present, a significant shareholding block -- mooted to be close to 40 per cent and growing -- will vote against the proposal.
The Cellestis takeover highlights a few pitfalls for all shareholders. Are the management and controlling shareholders of such companies conflicted in their desire to realise their wealth, rather than hold it on paper and continue to grow the company for all shareholders? Shouldn't they try to keep it in Australian hands, as seen with Cochlear, CSL and Resmed, at least a bit longer?
Management deserves the right to enjoy the fruits of their labour from the accumulated wealth of their shareholdings.
So how else can such founders sell down their significant holdings while allowing other shareholders to stay with the company? I would hope this avenue has been considered.
In this case, shareholders are not complaining about management. Just the opposite. But we can see the fine line in the argument for alignment of interests with all shareholders.
Vas Kolesnikoff is chief executive of the Australian Shareholders' Association
In reply to Mr Kolesnikoff's comment: "So I wonder why all these small individual fund manager shareholders don't join the Australian Shareholders' Association.. "
ReplyDeleteWell, annual fees of $115 for membership of what is mainly an educational/mutual-help association would certainly deter this one small shareholder (even if tax deductible)!
Management simply would not have a company on the ASX if it wan't for many small investors who TRUSTED and gave THEIR money so that the company could grow and prosper. If the founders wish to "draw down" their wealth they have many avenues in which to do this at board level, and can move on. This is a fire sale and has treated small investors with utter contempt!
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