Possibly permissible but certainly ill-advised

AIM company director buys shares a month before possible takeover announced – and three weeks after bidder first made indicative offer

On 30 November 2011 Synchronica plc, a company admitted to trading on AIM, announced that its CEO, Angus Dent, had completed the purchase of £49,000 of its shares at 6.125 pence per share.

Possible offer announced…

On 3 January 2012 Synchronica announced that it had been approached by Myriad Group AG regarding a possible offer by Myriad for Synchronica. On 31 January 2012 Myriad duly made its offer for Synchronica, at a price of 13 pence per share.

…CEO’s share purchases made three weeks after indicative offer received

The Times then reported (paywall) that Myriad had in fact approached Synchronica with an indicative offer letter on 11 November 2011 – three weeks before the share purchase by Synchronica’s CEO.

That indicative offer by Myriad was for 11.65 pence per share. The Myriad offer document describes that 11 November approach as “a non-binding indicative proposal to the Board of Synchronica regarding a potential offer”.

Synchronica at first described the 11 November approach by Myriad as a “vague approach that was firmly rebuffed”. But yesterday Synchronica issued a statement describing in more detail the communications between Synchronica and Myriad during November, adding that:

“On reflection the Synchronica Board accepts that it was not appropriate for this [the 11 November indicative offer letter] to be described as a ‘vague’ approach.”

But stressing that:

“Following a review with its advisors, Synchronica’s Board unanimously believes that the purchase of £49,000 worth of Synchronica ordinary shares on 30 November 2011 by Angus Dent, the Company’s CEO, was permissible.”

Offeror questions why CEO’s share purchases were not insider trading

Myriad is taking a rather different view of Mr Dent’s share purchases. In a statement on 24 February it said it had been in discussions with Synchronica about a possible offer from 18 November onwards:

“Myriad continued with its discussions with the board of Synchronica from 18 November 2011 up to and beyond the announcement of 3 January 2012 which detailed that Myriad and Synchronica were “in talks”.”

And suggested that Synchronica’s independent directors should investigate Mr Dent’s share purchases:

“Myriad asks the independent directors of Synchronica (being those not involved with conducting or authorising the share purchase) to consider:

i) whether there has been a breach of fiduciary duties by those directors involved; and

ii) whether those directors should resign with immediate effect.

Myriad also questions what information the company’s Nomad, Northland Capital Partners, received to approve this share purchase and as to why it was not viewed as insider trading.”

Probably one for the Financial Services Authority.

See also: Great timing! Michael Page executive directors sell shares 15 days before profit warning

Every little £40,000 helps! “PDMR: N Robbins. No. of Shares: 50,000.”

Friendly Corporate PSL

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