So much for the idea that backing a company with a big family shareholding will guarantee that the management's interests are closely identified with those of its minority shareholders.

Morson, which supplies technical and engineering staff to various industries, has shot down the idea in flames. It was floated on the stock market at 160p a share in 2006 when it was valued at £72.8m. The Morson family, which owns 46% of the business, is now offering to take the company private at 50p a share, valuing the company at just £22.75m.

The deal looks very good news for the Morson family, but is a terrible outcome for minority shareholders who are being offered an exit at close to the share’s all-time low-point.

The Morson family, in the form of chairman and his chief executive son, have overseen a dramatic decline in the company's fortunes since its flotation. Revenues have nearly doubled, yet operating margins have halved.

Last December the company axed its final dividend with the result that the share price roughly halved from 80p to 40p.

Without the dividend cut the company's shares would probably still be trading around the 80p level and yielding around 7.5%. The company's balance sheet gave little hint of the need for a dividend cut. The company remains profitable, interest cover is 8.7 times, and a maintained 6p dividend in 2011 would have been just over two times covered. As it is, the 2p interim dividend paid is more than 6 times covered - roughly twice the average 3 times cover of the previous five years.

However, the company has now warned that it can not even guarantee any dividend at all will be paid in the current year. No wonder the share price collapsed, and the Morson family can buy back their company for around 4 times earnings and 3 times Ebitda.

The Morson family, led by Gerry (73) and son Ged (48), is buying back a business with net assets of around £60m for £22.5m. Stripping out goodwill, the price being offered is still a discount to net tangible assets. The sole independent non-exec says that it is OK.

Quite the contrary. This is a grubby deal which deserves to be voted down. But given the size of the family shareholding, and the…

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