National World Plc, Re

National World PLC (which I shall call the “Company”) and which appears by Mr Andrew Thornton KC, seeks the court sanction of a proposed scheme of arrangement (the “Scheme”) pursuant to Part 26 of the Companies Act 2006 (the “Act”). The Company is a public limited company. It is listed on the LSE main market and it carries on a news publishing business. Its proposed acquirer (through a special purpose vehicle called Neo Media Publishing Limited (which I shall call “Bidco”)), is a company known as Media Concierge Holdings Limited (which I shall call “Media Concierge”). Media Concierge is an independent media group which carries on business in the UK and Ireland. Its shares are not, as I understand it, listed.

The purpose of the Scheme is to facilitate and enable the acquisition of the Company’s remaining issued share capital not already beneficially owned by Media Concierge. Since Media Concierge and its affiliates presently hold beneficially some 27.8 per cent of the company’s issued share capital, in effect this means that the acquisition concerns the remaining 72.2 per cent. The Scheme, therefore, is a transfer scheme and it is, as described in Mr Thornton’s helpful skeleton argument, in conventional form.

The consideration payable by Bidco for the scheme shares values the entire issued and to be issued share capital of the Company at approximately £65.1 million. This represents a premium of about 53.3 per cent to the closing price per share in the company on 21 November 2024, which was the last business day prior to the commencement of the offer period under the Takeover Code.

The Company has not anticipated that any Holder of Scheme Shares would appear at the hearing and none has, nor has the Company received any notice of opposition. This is hardly surprising in view of the fact that, as I shall detail later, some 99.9 per cent of the shareholders of the company have approved the Scheme in value terms.

The background to the Scheme is set out in the Chairman’s letter at Part 1 of the scheme circular and also in the explanatory statement of which I have read the parts recommended to me by Mr Thornton. It appears that the directors of the company have had some confidence in the Company’s continuing ability to succeed as an independent business and perhaps some qualms in that regard as to whether they should agree or recommend acquisition of the Company’s shares.

However, having taken into account both the fact that the shares in the Company have consistently traded at a discounted valuation multiple relative to its peers on the public markets and, further, that the trading in the company shares has been illiquid (making it difficult for the shareholders to monetise their holdings, a factor probably aggravated by the considerable blocking holding which is held already by Media Concierge) the directors of the Company have determined that at the premium offered this should be recommended and they have unanimously done so. In that they have taken the advice, which has confirmed their view, from Cavendish Capital Markets Limited. Accordingly, what comes before the Court is a unanimously recommended proposed acquisition of 23 pence per scheme share.

The Scheme of course affects, as I think I have already described, only the shares presently not held by or not beneficially owned by Media Concierge and its affiliates. The Scheme is in a standard form and provides for all scheme shares to be transferred to Bidco or its nominees and in that context Bidco can appoint any person as attorney on behalf of Holders of Scheme Shares to execute an instrument of transfer.

There are provisions in the Scheme, also in standard form, that if any scheme shareholder has not cashed his cheque on payment of the bid price he may claim that consideration within six months of the effective date but otherwise the parent company of Bidco will procure that such consideration is held on trust for the benefit of the relevant scheme shareholder for a period of up to 12 years from the scheme effective date. The scheme effective date is fast upon us, being the 23 May 2025.

The Scheme also imposes an obligation on the Company to make appropriate entries in its register of members recording the transfer of scheme shares to Bidco if the Scheme is sanctioned. As I shall explain, this is an entirely standard and possibly necessary requirement in order to ensure that there is the relevant element of give and take between the Company and its members to satisfy the requirements of the statute.

In that regard Part 26 of the Companies Act 2006 contains various detailed requirements and conditions for the exercise of the jurisdiction under the relevant part. In his skeleton argument Mr Thornton KC has carefully identified the relevant sections of the Act and I do not think that I need rehearse them at length for these purposes.

I am satisfied that the relevant jurisdictional requirements and the pre-conditions for my exercise of jurisdiction under that part have been or are to be satisfied in this case. In particular, I am satisfied that the Company is a UK company with its business here and thus falls easily within the architecture of the relevant provisions. Secondly, and as already indicated, the Scheme imposes and provides an obligation on the Company to pass the transfers which I consider is sufficient to provide an element of give and take as between the Company and its members so as to satisfy the relevant definition, relevant requirement, that the Scheme should be a compromise or arrangement proposed between the company and its members or any class of them.

I can mention in that regard, as I usually do and as is pointed out in the skeleton argument of Mr Thornton also, that in Re Jelf Group PLC [2015] EWHC 3857 (Ch) there was an issue raised, I think initiated by the judge, as to whether the schemes which had by then become standard did involve such a compromise or arrangement bearing in mind that at most the company’s involvement is somewhat exiguous. Nevertheless, convention and subsequent analysis have combined such that it is now, I think, to be taken to be clear that the obligation on the company to pass transfers does constitute give and take to comprise a compromise or arrangement within the meaning of the Act.

A third requirement is that the scheme must have been approved by a class meeting of the relevant class of shareholders at a meeting duly convened by the court, or meetings duly convened by the court. In that regard I am satisfied that the order convening a single class meeting made by Deputy ICC Judge Jones was correct. The consideration payable is the same to all scheme shareholders and there can be no doubt in those circumstances, it seems to me, that the single class meeting was appropriate.

I queried in this regard, and I shall return later in a slightly different context, whether any consideration was paid for certain irrevocable undertakings that have been provided by 65.9 per cent of the shareholders of the Company. That was not in fact stated in the explanatory statement or in the skeleton argument, as I think might have been preferable. However, Mr Thornton has taken instructions on the point in advance of the hearing and has confirmed to me that the irrevocable undertakings were not for any consideration or other ancillary benefit but simply to bind the relevant shareholders into the arrangements contemplated.

I have satisfied myself that the meeting which was convened by that order has been held in accordance with the directions which were also then provided and I have also seen and considered the report of the relevant meeting in the Chairman’s report. For these purposes the appointed person who did in fact act was David John Montgomery, the executive chairman of the company.

I have considered the relevant Scheme documentation and in particular the Scheme circular and the explanatory statement and, though there are one or I think two points which I should mention as emerging from the explanatory statement, they seem to be in the form and order required under the Act and in the practice statement.

At the meeting 99.9 per cent in value and 89..3 per cent in number of the shareholders who voted did so in favour of the scheme. 33.8 per cent by number and 67.9 per cent by value were in attendance at the meeting which was held at the offices of the solicitors to the scheme company. There were two split votes and the process approved in the Equitable Life case of counting them on each side of the ledger was adopted.

The relevant figures are arresting in that those who voted in favour comprised 134 million plus and those against under 120,000. It goes without saying, really, that this is a very considerable indication that the shareholders of the Company approve the Scheme.

In summary, therefore, I am entirely satisfied that the statutory conditions and pre-requisites of the exercise of my jurisdiction have been satisfied.

I turn therefore to the question of discretion, it being trite but always repeated and important that the court does not act as a rubber stamp, and must be satisfied as to the fairness of what is proposed in all the circumstances. That is of particular importance in ensuring that the majority do not obtain an advantage by force of numbers. The result is that the court is in other words the arbiter of fairness in the last resort.

Guidance as to the exercise of the court’s discretion has been set out in the by now hallowed terms in Buckley on The Companies Act at paragraph 219. The passage in question, which has repeatedly received the approval of the court, is set out in Mr Thornton’s skeleton argument and I do not think it necessary to set it out here. The passage has been approved in numerous cases, most particularly in Re Telewest Communications No. 2 Ltd [2005] 1 BCLC 772 at paragraphs [20] to [22] by the very experienced companies judge David Richards J (as he then was). It had earlier also been cited by Plowman J, also an experienced companies judge, in Re National Bank Limited [1966] 1 W.L.R. 819.

More recently Morgan J in Re TDG PLC [2009] 1 BCLC 445, drew together the four matters which require the attention of the court. First, the court must be satisfied that the provisions of the statute have been complied with and, as I have explained, I am so satisfied.

Secondly, the court must be satisfied that the class of shareholders the subject of the court meeting was fairly represented by those who attended the meeting and I am so satisfied. The court must also address and satisfy itself that on the evidence available and having regard to the circumstances it appears that the statutory majority are acting bona fide and not coercing the minority in order to promote interests adverse to those of the clients they purport to represent. For the reasons which I have indicated relating to the possibility that numbers may squeeze out perfectly fair dissent, this is an important factor but I am entirely satisfied that there was no such vitiating factor in this case.

Thirdly, the court must be satisfied that an intelligent and honest person, a member of the class concerned and acting in respect of his own interest, might reasonably have approved the scheme. In this regard the court takes its lead from what appears to be the informed approval of the majority unless there are factors indicating that they are, or some of them are, acting for some improper or collateral purpose. There is no evidence or suggestion of such a thing in this case and 99.9 per cent would be a difficult figure to overhaul by diktat.

Lastly and fourthly, there must be no ‘blot’ on the scheme. A ‘blot’ ordinarily connotes some impediment of the functioning or effectiveness of the scheme or some illegality in what is proposed. I am satisfied that there is no evidence of any such thing in this case.

I indicated that I would mention a couple of points which emerged from the explanatory statement. The first I have already touched on lightly, which is the feeling I had as I read through that the directors might initially have had reservations about agreeing to a bid. Mr Thornton, in my view, tackled this both head on and entirely correctly by pointing me in the direction that really the issue is whether the shareholders have been properly advised and alerted to the fact of that initial reluctance, if that is what it was, and the eventual resolution of it. It will be apparent from the fact that I picked it up in the course of my swift reading of the explanatory statement that it was properly disclosed, it was properly addressed and in being addressed the directors also had the benefit and relied on the advice of Cavendish.

The second matter which emerged in my reading of the explanatory statement, as I suppose it would have emerged from the reading of any other recipients of it, is that the Company had in mind to bring a proceeding against Media Concierge in the sum of £4.4 million. I raised that point with Mr Thornton at the hearing. Again, as it seems to me, he tackled it both directly and entirely accurately by saying that in that context, too, the issues are, first, whether the point has been properly disclosed – it follows from what I have said that it has been – but, secondly, that consideration had been given not only by the directors, but also by an independent third party, as to whether the consideration fully reflected the possible value of the asset which that course of action might have comprised.

Mr Thornton made two points in this regard. First, that even taking the £4.4 million at its gross value it would not balance the fact that a substantial premium is being paid but, second, he drew my attention helpfully to the fact that the matter has also been considered by Cavendish who have confirmed that they took that matter into account also in providing their independent advice to the National World Board as to the financial terms of the acquisition. Accordingly, whilst that subtext emerging from the explanatory statement gave me some pause for thought and some basis for further query, I am entirely satisfied in both respects.

Mr Thornton handed to me during the course of the hearing an update on the satisfaction of the relevant conditions applicable in the context of the acquisition. Suffice it to say that, apart from conditions entirely within the control of the court, these have all now been satisfied and the onus of that also is that Mr Thornton is instructed to give the usual undertaking on behalf of the bidder to proceed.

In summary, I consider that this is a scheme which can and should be sanctioned in terms which I shall briefly discuss with Mr Thornton, and I so order.