Takeovers Panel takes aim at figures behind The Market Herald Takeover

A scathing report from the Takeovers Panel has singled out David and Gavin Argyle over their takeover of The Market Herald last year.

The Market Herald’s chair and two of its key shareholders may have hid their overall shareholding and allegedly colluded to turf out the long time managing director of ASX-listed group of websites, Jag Sanger, a tribunal has found.

In a scathing 75-page ruling, the Takeovers Panel has revealed a raft of potential undisclosed conflicts of interest between key figures at the Perth-based business, which has been racked with management turmoil since its ill-fated takeover of classifieds site Gumtree last year.

The Takeovers Panel has already ordered David Argyle and his son Gavin Argyle should sell a chunk of their shareholding in The Market Herald, after finding they inappropriately purchased shares in the company last year.

But the reasons go further, ordering The Market Herald to appoint two independent directors and warning if the media company failed to do so, the Argyles should be banned from exercising their voting rights in respect of the relevant shares “for so long as they are associated with any director”.

The Argyles have also been barred from buying any shares in The Market Herald “except with the prior consent of the Panel or pursuant to a pro rata entitlement offer to all TMH shareholders to maintain (but not increase) the percentage ownership interest”.

The reasons for the ruling reveals a litany of potential undisclosed conflicts of interest between legal advisors for The Market Herald and the Argyles.

The Takeovers Panel’s findings note documents circulated to shareholders in September 2022 said David Argyle and his son Gavin were not considered “associates” under the Corporations Act and should not be seen as aggregated.

This is despite material being disclosed to the Takeovers Panel revealing a significant and deep association between the two men, as well as several other figures involved in a share raising of The Market Herald last year.

Former Magellan board member Karen Phin, UBS banker Kelvin Barry, and Laity Morrow commercial lawyer Kerry Morrow, who oversaw the decision, warn the Argyles were uncooperative in their engagement with the inquiry and take aim at Clayton Utz lawyers over conflicts of interest.

The dispute centres around the removal of former PwC consultant Mr Sanger, who ran The Market Herald group, which includes HotCopper, Gumtree, CarsGuide and Autotrader, from 2018.

Mr Sanger had been key to the Market Herald’s acquisition of Gumtree in 2022 in a $87m deal secured by a $60m vendor financed loan with Adventa.

HotCopper staff at the firm's office. Picture: Supplied

The Market Herald had proposed to fund the loan through a $26.55m share raise, which the Argyles had seen as a threat to their large holding in The Market Herald.

The Takeovers Panel notes the relationship between Mr Sanger and the Argyles soured in the wake of this deal, despite Gavin telling Mr Sanger “Dad is pleased and happy with the deal, so that’s good”.

The report finds The Market Herald’s chair Alec Pismiris was “intimately involved” with Argyles in attempting to remove Mr Sanger, assisting the men in drafting notices for the board.

Mr Pismiris had a long history with the Argyles and has had shareholdings or acted as a director in 14 companies associated with the men.

Despite this, Mr Pismiris told the panel “he and Mr David Brian Argyle have never been common directors of any company” and any circumstances that existed between the two were “purely coincidental”.

The Takeovers Panel also takes aim at law firm Clayton Utz over its role in The Market Herald’s blow-up, finding the firm was advising the Argyles as well as the business, something that was not disclosed.

“Had this potential conflict been disclosed at the time TMH’s Notice to Become a Party was submitted, we would have considered, and potentially sought submissions, as to whether to grant leave for TMH to be legally represented by Clayton Utz in these proceedings and, if so, whether leave should be subject to any conditions,” the report said.

The findings warn Clayton Utz and some parties “showed a lack of candour that prolonged proceedings unnecessarily”, warning the law firm did not “meaningfully engage” over conflict concerns.

“We would have expected a more candid approach to disclosure than has been adopted by TMH,” the report said.