The High Court has fixed €30.6 million as the price at which the Wilson shareholders should purchase Donegal Investment Group’s shares in ELST, the company at the top of the Monaghan Mushrooms group. The valuation is based on an assumed 35% stake and may be adjusted after a later hearing on whether Donegal’s holding is 30% or 35%.
The ruling decides a discrete valuation issue in Donegal’s wider petition under section 205 of the Companies Act 1963, in which it alleges oppression by majority shareholders. For this issue, the first four respondents admitted a non-specified ground of oppression, giving the court jurisdiction to order a purchase. The judge did not determine the disputes over the individual alleged acts of oppression.
Three valuation experts gave evidence. Donegal’s expert, Tom Lindsay, valued its 35% shareholding at €63.5m without a minority discount. The respondents’ experts, David Tynan and David O’Flanagan, produced figures of €26.4m and €26m respectively on the same no-minority-discount basis. The judge found that their valuations relied too heavily on discounted cash flow forecasts and preferred Lindsay’s view that a market approach was more appropriate, with discounted cash flow used only as a cross-check.
The court also held that no minority discount should apply. It found that the company emerged from a merger that had the features of a joint venture and quasi-partnership, and that the shareholder agreement did not envisage a minority discount on a sale. The judge also rejected a marketability discount for the specific buyout being considered.
In arriving at the final figure, the judge accepted Walkro’s 2012 acquisition as a relevant comparable transaction. Its 4.75 earnings multiple, considered alongside other evidence, led the court to use a median multiple of 6.1 against normalised 2014 EBITDA of €44.9m. The valuation also included €114.3m in net debt adjustments, €42.4m for environmental or non-income-enhancing capital expenditure treated as debt-like, and amounts for buying out minority interests in Walkro and Tunnel Tech.
The resulting equity value for Monaghan Mushrooms was €87.5m, with 35% valued at €30.6m. The order concerns the price for the assumed stake only; any adjustment depends on the eventual determination of Donegal’s shareholding.