Jump to content

Ideas on how to oppose a going private offer?


PlanMaestro
 Share

Recommended Posts

Given the low interest rates, reasonable valuations in several sectors and renewed access to debt it is starting to feel like the 1980s. One of the stocks I own just received a lowball going private offer, 5% premium to the most recent price and 25% of all time highs, from its largest shareholder (70%).

 

Does anyone has experience on how to oppose self-dealing transactions?

Link to comment
Share on other sites

Given the low interest rates, reasonable valuations in several sectors and renewed access to debt it is starting to feel like the 1980s. One of the stocks I own just received a lowball going private offer, 5% premium to the most recent price and 25% of all time highs, from its largest shareholder (70%).

 

Does anyone has experience on how to oppose self-dealing transactions?

 

Is this CPD?

Link to comment
Share on other sites

After a complete settlement of the FDA quality issues? Probably something closer to $20. 2x sales for a high operating margin, low capex, 20%+ growth per year seems ... fair. SunPharma is really lowballing this, they recently announced that some of the issues are close to be resolved and shipment of some products resumed.

 

This was supposed to be my Oil Salad scandal, it is getting more complicated than that.

Link to comment
Share on other sites

moral of the story: consider the risk of a majority-controlled public company in realizing value.

 

I think the punch line - not much of a fan of moralizing with investments - is that investing is always risky and a large margin of safety has to be demanded. For example, you can also get hit by management doing stupid transactions when control is diluted (ie: Kraft is a small mistake, but sure you guys know some more destructive like BAC/ Countrywide).

 

I actually have a small 15% profit since Sept 2009 but was expecting something much better than that. 5% premium, close to the a 52w lows and well below the 52w high they will probably have to improve their offer ... merger arbitrage anyone?

Link to comment
Share on other sites

moral of the story: consider the risk of a majority-controlled public company in realizing value.

 

I think the punch line - not much of a fan of moralizing with investments - is that investing is always risky and a large margin of safety has to be demanded. For example, you can also get hit by management doing stupid transactions when control is diluted (ie: Kraft).

 

I actually have a 15% profit since Sept 2009 but I was expecting something much better than that. 5% premium, close to the a 52w lows and well below the 52w high they will probably have to improve their offer ... merger arbitrage anyone?

 

Hmmm.  If the deal goes through, you get a minor upside.  If it takes 6 months to close, probably a 10% annualized return?  If the deal fails to go through and your valuation is correct, you get even better results.

 

I think it is a quite interesting situation.

 

There is a similar situation in BCIS.OB where the majority owner ended up increasing the bid.

 

It would depend on whether the outside directors, I think. 

Link to comment
Share on other sites

  • 1 month later...

Here is info on the BCIS situation. I would contact Geoff if I had more serious questions.

 

Thanks for the suggestions Myth. The situation has a lot of similarities with BCIS and I discussed those with Geoff during the weekend. Very smart guy.

 

PlanMaestro -

Any updates on this situation?

Thanks.

-M

Link to comment
Share on other sites

Nothing, most of the people that I contacted were pessimistic on the possibilities of a successful persuasion or fight. A protracted merger arbitrage is not what I was looking for while sitting on other 5x and 10x chances.

 

I had a little conversation with myself (do I want to be rich or instead to soothe my ego?) and decided to follow Philip Fisher's advice: avoid activist investing, either agree completely with management or move on.

Link to comment
Share on other sites

Nothing, most of the people that I contacted were pessimistic on the possibilities of a successful persuasion or fight. A protracted merger arbitrage is not what I was looking for while sitting on other 5x and 10x chances.

 

I had a little conversation with myself (do I want to be rich or instead to soothe my ego?) and decided to follow Philip Fisher's advice: avoid activist investing, either agree completely with management or move on.

 

Smart man. Its not worth it inmo unless you can buy a huge chuck.

Link to comment
Share on other sites

  • 3 weeks later...

Would like to thank PlanMaestro for bringing up CPD.

Bought at $4.75 in December and sold yesterday at $5.15.  Not bad for a 8% return in a couple months.

 

Glad you won this one zippy. I was on the sidelines, is it already a done deal?

Not sure it is a done deal or not as I am not sure any major shareholders may sue or not.

However, I am glad to get the money back and move on. I think I am saved by the price that I paid more than anything.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...