Galatasaray ruling may stop merger

A decision that was hailed by some foreign investors as an important victory for shareholder rights was made when Turkey's financial markets watchdog ordered Turkish Galatasaray to make a buy-out offer to minority shareholders in a controversial merger proposal.

Galatasaray's owners had proposed merging the club, which is not listed, with Galatasaray Sportif, a listed merchandising division, according to Reuters. That division receives revenues from merchandising and television rights.

Galatasaray Sportif was put forward in 2002 as a stand-alone operation protected from the fluctuations of the football club's fortunes on the pitch. It attracted interest from foreign investors, including several London-based fund managers who strongly opposed the merger. They claimed, among other things, a breach of the terms on which Sportif was floated.

Their appeal to the Capital Markets Board was seen as a test of how regulators would act to protect minority shareholders rights on the Istanbul stock market.

The CMB ruled on Friday that the club had to make an offer to minority shareholders in Galatasaray Sportif and the price would be no less than the three-month average at which the merchandising division shares traded before the merger announcement was made last August.

Shares in Galatasaray Sportif soared 11 per cent after the ruling.

"We are very pleased that the capital market rules and principles were upheld by the CMB," said Angelo Moskov, a partner in QVT Financial, one of the main foreign shareholders in Galatasaray Sportif and the most active in seeking the intervention of the watchdog.

Analysts said the merger would most likely be withdrawn because Galatasaray might not have the cash to make the offer to the shareholders.

Source: euFootball.BIZ © Copyright 2006 - All rights reserved.