Resolute Forest Products Commences Takeover bid of Fibrek

[triedtestedand]

Not yet 50% ...

 

http://www.newswire.ca/en/story/960355/resolute-announces-take-up-of-additional-fibrek-shares-and-extension-of-offer-to-may-4

 

So Steelhead has not (yet) tendered to ABH ...

 

Now is where I need The Amazing Kreskin.  Will Steelhead truly act independently?  This is one step towards that (much more than their press release).  If so, why would ABH be so confident as to NOT up their bid, and (theoretically) allow MERC to secure 50.1%.  From a dark side perspective, what if Steelhead didn't tender to either bid, then went back to ABH in second step and settled for original amount.

 

Also, this drags things out further ... deadline of May 4 means that MERC has to extend their offer beyond that as well, no?  Maybe ABH wants to see what # commit to MERC by friday before determining their next move?

 

 

[tyska]

Is there no end to the length of time that they can keep extending this. It's like having a tooth pulled in slow motion.

[alertmeipp]

We need 98% of the remaining to tender. Tough as we will have some dumb ass who don't know w going on

[Guest Quebec]

Some musings...

 

Without Steelhead's 5%, the most that Merc can get is 46.2% while Abh has 48.8% . Merc will likely get even less because of procrastination/wait-and-see. So Steelhead can proclaim that the Abh offer has the preference of the majority (48.8>46.2) and accordingly tender to them without looking so much like a player in an orchestrated coercitive insider takeover bid

[SharperDingaan]

Very nice - ABH needs another 1.6M shares to top the 50%+1, & it is now very clear that the only way they can get it is to bid up. To avoid losing the control block it is now in the Steelhead interest to outbid ABH for everything that comes on the market. And it is the ABH interest to up their offer ASAP to spike this virtuous spiral.

 

And each new round of docs is more demand for the pulp  ;)

[lessthaniv]

Very nice - ABH needs another 1.6M shares to top the 50%+1, & it is now very clear that the only way they can get it is to bid up. To avoid losing the control block it is now in the Steelhead interest to outbid ABH for everything that comes on the market. And it is the ABH interest to up their offer ASAP to spike this virtuous spiral.

 

And each new round of docs is more demand for the pulp  ;)

 

Invert:

 

What if ABH / Steelhead are still silently on the same team. The goal is to get ABH to 67% on this bid so the majority of the minority includes all these shares and the vote works in their favour. ABH buys up enough stock to acquire the 50.1% on their own. That kills the MERC bid. Then, Steelhead is free to tender their shares to the ABH deal without any repercussions as their is no longer a competing offer. If Steelhead has acquired more stock in the mean time they may be getting closer to the combined total of 67%.

 

EDIT:

 

Thinking this through further, ABH can only buy in 5% max and must report. As well, Steelhead sits at just under 5% and should it go above ... it must report. ...

 

I wonder if this "secret" meeting that took place was surrounding ABH's need to get to 50% on their own before Steelhead tenders?

 

Love to be a fly on the wall at that meeting.

 

 

[alertmeipp]

Very nice - ABH needs another 1.6M shares to top the 50%+1, & it is now very clear that the only way they can get it is to bid up. To avoid losing the control block it is now in the Steelhead interest to outbid ABH for everything that comes on the market. And it is the ABH interest to up their offer ASAP to spike this virtuous spiral.

 

And each new round of docs is more demand for the pulp  ;)

 

Invert:

 

What if ABH / Steelhead are still silently on the same team. The goal is to get ABH to 67% on this bid so the majority of the minority includes all these shares and the vote works in their favour. ABH buys up enough stock to acquire the 50.1% on their own. That kills the MERC bid. Then, Steelhead is free to tender their shares to the ABH deal without any repercussions as their is no longer a competing offer. If Steelhead has acquired more stock in the mean time they may be getting closer to the combined total of 67%.

 

EDIT:

 

Thinking this through further, ABH can only buy in 5% max and must report. As well, Steelhead sits at just under 5% and should it go above ... it must report. ...

 

I wonder if this "secret" meeting that took place was surrounding ABH's need to get to 50% on their own before Steelhead tenders?

 

Love to be a fly on the wall at that meeting.

 

I bet Steelhead is talking to ABH now to get more $ for their shares or share they will tender to MERC. ABH can't afford to drag this longer, none of minority shareholders are going to tender to them with their stink bid.

[FFHWatcher]

It certainly isn't clear to me that ABH will have to 'bid up' to get those last 1.6M shares.  Maybe if they 'bid up' to 96 or 97 or 98 cents, they could get the rest. I don't consider that 'bidding up' FBK.  Our partners (fellow shareholders) are a bunch of losers...present company excluded.... unless you gave up and sold a whack at under $1.00...than I would have to put you in the loser category and I mean that in the nicest way :-)

 

Let us assume that they get 50.1+%.  What is next?

 

 

[lessthaniv]

It certainly isn't clear to me that ABH will have to 'bid up' to get those last 1.6M shares.  Maybe if they 'bid up' to 96 or 97 or 98 cents, they could get the rest. I don't consider that 'bidding up' FBK.  Our partners (fellow shareholders) are a bunch of losers...present company excluded.... unless you gave up and sold a whack at under $1.00...than I would have to put you in the loser category and I mean that in the nicest way :-)

 

Let us assume that they get 50.1+%.  What is next?

 

My thought today ... Where did the 2.6M shares that were tendered come from?

 

1) Could an arb fund be buying at $.95 only to tender to ABH to make a quick 5% with virtually no downside, or

 

2) Now that Prem, Pabrai are no longer involved in the deal (they've tender already) what to stop them from buying up more open market stock and tendering it to ABH?  Nothing that I can think of.  The Insider bid stuff did not fly and the original transaction is complete.

 

In my simple mind, it's much easier for ABH to find 1.2% that for MERC to find 50.1% when there is only 51.2% left floating around.

[triedtestedand]

<IV:

 

RE:  1) Could an arb fund be buying at $.95 only to tender to ABH to make a quick 5% with virtually no downside

 

->  The ABH press release denotes that for the 2.6M shares tendered, 76K shares were issues, along with $1.5M ... implying that whoever tendered took (in aggregate) the combo of cash+shares (vs cash only), so not sure an arb fund would be keen on such given ABH share price is down >15% since the announcement.

 

RE:  2) Now that Prem, Pabrai are no longer involved in the deal (they've tender already) what to stop them from buying up more open market stock and tendering it to ABH?  Nothing that I can think of.  The Insider bid stuff did not fly and the original transaction is complete.

 

-> Per the separate ABH thread, it Prem appears to be buying more ABH independently (after saying he wanted all cash - vs cash & shares - for his FBK shares), so not sure what to make of that.

[Guest Quebec]

FBK shares from those that have given up could be bought by say Goldman Sachs or CIBC below 1.00 and tendered to abh for a little profit/cost now and some business going their way later for their kindness? Lots of buying come from these houses. Maybe Chou voted to help its abh position too. All speculation but its pretty easy for them to reach 50.1% and should be in place at the next deadline.

 

The 66.7% might be more challenging. Maybe a signed ppa could have them bid a little more to wrap this up.

[Guest Quebec]

Isn't FFH taking the mix of cash and shares ?

[SharperDingaan]

ABH had to extend EIGHT times to get that 2.6M shares, & most all of it was allready on side almost from day 1 (look at the early votes). The friendly shares have gone; now they have to deal with the hard cases - or tender to Mercer.

 

ABH could try to buy the shares by marching the market bid up in increments, & hoping for hits. They will get a few shares - but not 1.6M, as Steelhead &/or Merc would immediately top the market bid by 1c to prevent any more shares going to ABH. The market price will spiral upward & ABH will always be on the losing end. ABH could negotiate for block sales, but it is virtually certain that every hard case will want a healthy control block premium over the $1.40 Merc is offering. ABH could raise it bid well over the Merc bid which would work, or they can give up & tender to Merc - which would also work. And in the meantime .... even the 'elevator news network' is now mocking ABH.

 

Even at 50%+1 the problem does not go away - the Merc tender dies, but minority shareholders, Steelhead, & Merc DO NOT HAVE TO SELL THEIR SHARES. To buy peace, ABH would have to pay greenmail, & immediately break up FBK to maximize value - or swallow 50%+1 of every $ of loss that FBK generates. Just as the squeeky wheel gets the grease, the stinking fish get the bid  ;)

 

The only way ABH can now make it work is via a knock-out bid, & the clock is ticking. It is well known that most have nothing against tendering to ABH, but it is a flat NO untill there is a realistic offer on the table.

 

We live in interesting times ...

 

 

 

[alertmeipp]

All, we won't know more until this Friday unless MERC plays hard ball and lower their min. condition or pulls out...

 

ABH will need to pay up to 67% unless they want to drag this one for couple years but then FBK can be a very different company.

 

Btw guys, having ABH as major shareholder isn't necessarily a -ve long term.

 

 

[alertmeipp]

ABH had to extend EIGHT times to get that 2.6M shares, & most all of it was allready on side almost from day 1 (look at the early votes). The friendly shares have gone; now they have to deal with the hard cases - or tender to Mercer.

 

ABH could try to buy the shares by marching the market bid up in increments, & hoping for hits. They will get a few shares - but not 1.6M, as Steelhead &/or Merc would immediately top the market bid by 1c to prevent any more shares going to ABH. The market price will spiral upward & ABH will always be on the losing end. ABH could negotiate for block sales, but it is virtually certain that every hard case will want a healthy control block premium over the $1.40 Merc is offering. ABH could raise it bid well over the Merc bid which would work, or they can give up & tender to Merc - which would also work. And in the meantime .... even the 'elevator news network' is now mocking ABH.

 

Even at 50%+1 the problem does not go away - the Merc tender dies, but minority shareholders, Steelhead, & Merc DO NOT HAVE TO SELL THEIR SHARES. To buy peace, ABH would have to pay greenmail, & immediately break up FBK to maximize value - or swallow 50%+1 of every $ of loss that FBK generates. Just as the squeeky wheel gets the grease, the stinking fish get the bid  ;)

 

The only way ABH can now make it work is via a knock-out bid, & the clock is ticking. It is well known that most have nothing against tendering to ABH, but it is a flat NO untill there is a realistic offer on the table.

 

We live in interesting times ...

 

 

 

We are always so optimistic! What do u think ABH is waiting for? MERC to drop first? If MERC somehow got 50.1% (possible but not likely), ABH is done (tendering back to MERC would look dumb on them).

 

I say if ABH were to offer a superior bid, they will do so before Friday just to ensure they win (5% chance). After MERC drop, they can offer maybe 1.15 to get up to 67%.

[tyska]

SD, I was never good with crosswords. :-[ Who is the "elevator news network"

[SharperDingaan]

ENN: The TV screen in the top right or top left corner of an elevator, that everyone looks at when travelling up & down in the elevator. The news scrolling accross that screen .... is brought to you by the Elevator News Network.

 

Alert: If Merc doesn't get the 50%+1, they simply bump the price & try again. Eventually ABH either tenders to them, or they tender to ABH - & collect the 8M break up fee + the gain on their shares. It is highly likely that ABH is 1) waiting to see how much Mercer gets, & is 2) waiting for fewer but bigger opponents to cut a deal with.

[alertmeipp]

SD, hope you are right, the fact that merc has not pulled out yet is a good sign that they still want fbk, I agree that if they extend as well they will eventually win 50%+.

[tyska]

Thanks SD. Try not to laugh, but I've never been in an elevator with a TV screen, benefit or curse of living in the boonies.

 

Any thoughts on if both are waiting to see were the ppa comes in before a final push. The suspicious side of me thinks that this should be resolved already and someone is delaying it.

[Hielko]

From: http://finance.yahoo.com/news/abitibi-still-unable-convince-fibrek-145300057.html

 

In addition, the terms of the support agreement between Fibrek and Mercer provide that Mercer will extend its offer to a date that is at least 3 business days later than any extended expiry date of the Abitibi unsolicited insider bid.

 

Since Abitibi has extended the offer date to the 4th of may I would guess that the Mercer bid is also going to be extended. Going to be interesting to see how this is going to play out. With Resolute holding 48% it's going to be hard for Mercer to get 50.1%, but not impossible.

[nielfiel]

From: http://finance.yahoo.com/news/abitibi-still-unable-convince-fibrek-145300057.html

 

In addition, the terms of the support agreement between Fibrek and Mercer provide that Mercer will extend its offer to a date that is at least 3 business days later than any extended expiry date of the Abitibi unsolicited insider bid.

 

Since Abitibi has extended the offer date to the 4th of may I would guess that the Mercer bid is also going to be extended. Going to be interesting to see how this is going to play out. With Resolute holding 48% it's going to be hard for Mercer to get 50.1%, but not impossible.

 

It sounds like from the language in the press release from Fibrek, Mercer's Bid lasts 3 business days longer than any extended offer from ABH.  "In addition, the terms of the support agreement between Fibrek and Mercer provide that Mercer will extend its offer to a date that is at least 3 business days later than any extended expiry date of the Abitibi unsolicited insider bid."  So the Mercer bid, due to the ABH extension, expires May 9th.  Just keeps dragging out...

[ubuy2wron]

Is this where the short players start to do their work. Could not someone create a bunch of shares to ensure that either party has 50% plus 0ne.

[alertmeipp]

From: http://finance.yahoo.com/news/abitibi-still-unable-convince-fibrek-145300057.html

 

In addition, the terms of the support agreement between Fibrek and Mercer provide that Mercer will extend its offer to a date that is at least 3 business days later than any extended expiry date of the Abitibi unsolicited insider bid.

 

Since Abitibi has extended the offer date to the 4th of may I would guess that the Mercer bid is also going to be extended. Going to be interesting to see how this is going to play out. With Resolute holding 48% it's going to be hard for Mercer to get 50.1%, but not impossible.

 

It sounds like from the language in the press release from Fibrek, Mercer's Bid lasts 3 business days longer than any extended offer from ABH.  "In addition, the terms of the support agreement between Fibrek and Mercer provide that Mercer will extend its offer to a date that is at least 3 business days later than any extended expiry date of the Abitibi unsolicited insider bid."  So the Mercer bid, due to the ABH extension, expires May 9th.  Just keeps dragging out...

 

Yes, we have got to wonder where the additional 2% tendered to ABH comes from.

[ubuy2wron]

To quote Nancy Reagan is it not time for the non-lock-up shareholders to "just say no". There was an offer on the table for 40% more, the buyer thought that it was worth more or would not make the offer. I have no dog in this fight as I own no shares but why sell or tender unless you think the future is about to get a lot worse for FBK. I believe the courts made a very large mistake here.   

[JEast]

The lower ABH goes, it would appear the stronger the $1 offer gets as you are getting very discounted ABH shares.  No holdings in either, but good business lesson for future reference.

 

 

Cheers

JEast