Art Basel’s Parent Company Has Cleared a Path for James Murdoch’s Investment After Shareholders Threatened to Kill the Deal
Murdoch will gain three seats on the board, while some Swiss leaders will step down next year.
MCH Group, the owner of Art Basel and other international trade fairs, may have just cleared the way for a much-needed cash infusion from James Murdoch after months of uncertainty, roadblocks, and opposition from shareholders. The investment from Murdoch’s company, Lupa Systems, is expected to be approved at the next shareholder meeting on November 27.
The deal, first inked in August, hit a snag after several shareholders objected to a clause that would have allowed Lupa Systems to hold up to 49 percent of the shares without making a public offer for the company. As part of the revised terms, existing shareholders will be able to increase their investment and new investors will have the opportunity to buy in.
MCH will issue up to $114 million (CHF 104.5 million) worth of additional shares in two segments without compromising shareholders’ current proportional ownerships. Shareholders will have the option to sell their own holdings to Lupa Systems and the Canton of Basel-Stadt, which has pledged to maintain a 33.3 percent stake in MCH.
If the new terms are approved, shareholders Erhard Lee and LLB Swiss Investment, which own 10 percent of MCH, have agreed to withdraw opposition to the Murdoch deal. Back in September, Lee told Artnet News that he “sued the company because the proposed deal was very unfair and would have diluted the minority shareholders strongly. This was unacceptable to us.” He added that he planned to negotiate “new and fair conditions for a capital increase.”
As part of the reshuffle, MCH will also make changes to its board. Three members from Lupa Systems, including Murdoch himself, will join alongside three new independent members. Three veterans of the MCH board will step down in 2021.
Ahead of the November 27 vote, the MCH website now includes brief video messages from several executives as well as Murdoch himself, who says: “MCH is a great company with a long history of innovation. The company’s brands are well known not only in Switzerland, but around the world. At its heart the business is about connecting people, to enterprise, to art, and to communities.”
Murdoch and MCH executives acknowledge that there are still serious challenges ahead, particularly with high infection rates in some areas of the US and European countries entering a second lockdown phase. Indeed, 2020 has been unkind to the events business in general, and to MCH in particular. The group announced in September that its income had fallen by 55 percent year over year compared with the first half of 2019. The company ended the first half of 2020 with a loss of $26.5 million (CHF 24.4 million).
Nevertheless, Murdoch said, “We’re committed to accelerating the pace of innovation at MCH, to redoubling the company’s commitment to its community in Basel and Zurich, and to ensuring that the company is on firm financial footing, as it re-emerges in a new landscape.”
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