Dispute On Shareholder Rights At Galatasary - 18/02/2007

Several investors in the merchandising arm of leading Turkish football club Galatasaray are locked in a dispute with the club's owner over minority shareholding rights. These investors, including several London-based fund managers, object to a proposal by the club's unlisted parent company to merge the merchandising division, known as Galatasary Sportif, with its footballing side. They claim that such a move, among other things, contradicts statements in the prospectus issued when they invested in the division that ring fenced its revenues from those of the rest of the club. QVT Financial, a $5.5bn investment management firm, that owns about $20m of Galatasary Sportif stock, has complained to the Turkish market watchdog, the Capital Markets Board. The firm, and other shareholders, want the watchdog either to block the merger or to order the parent company to buy them out at the price the stock traded at before the merger was proposed last summer, which is at least 50 per cent higher than its current share price. QVT says the CMB's approach to the merger proposal is a crucial test to verify the Turkish market's reliability in the eyes of international investors, but the watchdog seems to be more inclined to view it as a dispute between shareholders which may not break any laws.