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Gladstone

  • BY: Andrew Hore |
  • POSTED: 25/02/2009 |

Constellation Software Inc has sent a letter to Gladstone shareholders outlining why they should vote its president onto the board of the membership software company.

Constellation owns 29.9% of Gladstone, while the company’s management claims the support of 21.2% of the share capital.

Constellation believes that Mark Leonard’s experience growing software companies will be useful to Gladstone. It also argues that it is not a competitor because most of its business is in other markets. However, it does have operations in UK and Australian fitness and leisure markets. The fact that only two contracts have been secured in the past year does not mean that it is not competing. Constellation says that it does not intend to grow in these markets other than through its shareholding in Gladstone. It is unclear if that means that Constellation’s competing operations will not try to win more business – which would be strange.

As a significant shareholder Constellation argues that its interests are more in line with other shareholders. It says that

Gladstone says that there would be a conflict of interest if Leonard became a director. In response, Constellation argues that the Gladstone board has not “properly disclosed or monitored actual or potential conflicts of interest of its directors”. It says that Gladstone will propose new articles of association at its AGM to “not only to approve conflicts of interest of board members without recourse to shareholders but also any future conflicts that might arise”. There is no indication what conflicts Constellation is referring to.

The meeting to vote on the proposal to put Leonard on the board will be held on 16 March.

At 19.75p a share, Gladstone is valued at £9.5m.

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