Principal shareholder's jail sentence forced FIM into Glitnir sale

Bjarni Ármansson

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Glitnir, an Icelandic global player in the financial market, and the FIM Group, a leading asset management firm in Finland, announced on Monday a transaction whereby Glitnir agrees to acquire 68.1 per cent of the FIM share capital from the Finnish group's 11 key owners.
      For the FIM Group's principal owner, the former chairman of the board Seppo Sairanen, the published transaction will translate to earnings in excess of EUR 109 million, EUR 107 million of which will come from selling his 31.6 per cent share of the company that he founded in 1987 and the rest as income from dividends.
      This is a passable compensation for the owner, whose unconditional prison sentence for money laundering received last summer was a major contributor to the transaction. Sairanen has since appealed against the ruling at the Court of Appeal.
      In the autumn Sairanen's situation was rendered even more cumbersome by the Finnish Financial Supervision Authority's (FIN-FSA) decision to revoke his right to vote at FIM. Sairanen has not accepted this ruling either.
      The company's list of shareholders makes interesting reading. Sairanen owns 13.5 million shares in the company, and yet has no right to vote. The second-largest owner, portfolio manager Markku Kaloniemi, in turn, has 15 per cent of the votes with his 4.4 million shares.
      Kaloniemi admitted on Monday that Sairanen's sentencing and the FIN-FSA ruling "complicated things with regard to the FIM strategic objectives".
      Or, as FIM CEO Risto Perttunen formulated the issue: "We could not embark on a venture without the principal owner, and vice versa."
     
The Icelandic bank provided a perfect solution to this quandary. After a month-long negotiation process started from FIM's initiative, a transaction was made public on Monday, according to which Glitnir will purchase the entire FIM Group for EUR 341 million.
      Sairanen's sentencing was a cause of concern for the buyer as well. "We received legal counselling and were informed that the problems centre on only one individual. In our understanding the actual company's processes are sound", Glitnir CEO Bjarni Ármansson explained.
      In the first comments concerning the transaction, its meaningfulness has not been questioned, though the actual purchase price has caused some raised eyebrows. Glitnir has agreed to pay eight euros per share for FIM, which is 30 per cent higher than FIM's closing price on Friday.
      The announcement of the deal caused the FIM stock price rise by that 30 per cent, whereas Glitnir's price slipped down, though not by much.
     
Ármansson justified the deal on at least two main grounds.
      Firstly, the Icelandic purchaser wanted to branch out to the Finnish market. Secondly, as a result of the merger, the combined Glitnir and FIM will have a total of EUR 8.5 billion in assets under management, which should attract considerable interest from foreign investors.
      In addition to the agreed 68.1 per cent share of FIM, Glitnir has announced its intention to make a public offer to acquire all the remaining shares in the company for the same EUR 8.00 price per share.
      Both the purchaser and the seller affirmed at some length that the transaction would not cause changes to the position of the 284 FIM employees.


Links:
  FIM: Additional information on FIM-Glitnir transaction
  Glitnir News Room

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