Resolute Forest Products Commences Takeover bid of Fibrek

[lessthaniv]

Not to beat this dead horse more than it needs to be beaten but how do others feel about loading up at $0.95 and tendering to ABH?  Risk of lower ABH share valuation, risk of ABH not moving ahead to get the other 50% and just letting it dangle until it declines again?  I am thinking that there is an 80% chance that FBK shareholders, now that MERC is gone, realize that it is likely that ABH will gather enough shares.  Perhaps there is a 5% short term gain here?  Or this just another opportunity for shareholders to lose on FBK stock, yet again?

 

My best guess is that the ARB guys are doing this. However, knowing the cash is limited to $70M they would likely recieve a combination of cash and shares. They could offset the risk by shorting ABH knowing they will get shares back shortly to replace and make a nice, hedged return.

 

That could explain the ABH downside recently and supports my line of thinking to manually transact.

I actually thought that was a good idea (and bought the shares before reading the fine print closer...), but it doesn't work. The amount of cash that's available is prorated based on the number of shares tendered, and the share part of the offer isn't worth as much as it used to because ABT is down since the offer was made. So no way to make easy money (unfortunately...)

 

good point.

[Uccmal]

This thread may be used in future behavioural science classes as a case study in anchoring.

 

I think the main thing to take from all this, is how the regulators and Fairfax view minority shareholders rights.

 

Or they really wanted out.  Get over it.  I sold out of this between last winter 011. and december.  I lost money but I didn't sit around with an outsized position whining.  My takeaways from this:

1) dont invest in commodity companies that pay no dividend.  I have held varying sizes of Canfor Pulp, since spring 09, and probably made 50% on dividends alone.  BTW, its on sale now, again.  The dividend will rise and fall with distributable cash, which should stabilize some as the power is bought on line.

2) Dont invest alongside FFH.  Buy FFH stock directly.  Dump a stock the day FFH initiates a rights offer.

3) LessthanIV is correct about anchoring.  Along the way we all built a thesis about the intrinsic value

of SFK.  In the meantime the price of pulp tanked.  Look at Mercer to a comparable example. 

4) You want to play the game, prepare to be burnt.  It isn't as if FFH or Pabrai made buckets of money on this one.  It isn't the first time I have been burnt and it wont be the last. 

 

My circle of competence is increasing constantly, but at the same time, the number of crap companies I refuse to invest in also inceases. 

 

 

 

 

 

[tyska]

This thread may be used in future behavioural science classes as a case study in anchoring.

 

I think the main thing to take from all this, is how the regulators and Fairfax view minority shareholders rights.

 

Or they really wanted out.  Get over it.  I sold out of this between last winter 011. and december.  I lost money but I didn't sit around with an outsized position whining.  My takeaways from this:

1) dont invest in commodity companies that pay no dividend.  I have held varying sizes of Canfor Pulp, since spring 09, and probably made 50% on dividends alone.  BTW, its on sale now, again.  The dividend will rise and fall with distributable cash, which should stabilize some as the power is bought on line.

2) Dont invest alongside FFH.  Buy FFH stock directly.  Dump a stock the day FFH initiates a rights offer.

3) LessthanIV is correct about anchoring.  Along the way we all built a thesis about the intrinsic value

of SFK.  In the meantime the price of pulp tanked.  Look at Mercer to a comparable example. 

4) You want to play the game, prepare to be burnt.  It isn't as if FFH or Pabrai made buckets of money on this one.  It isn't the first time I have been burnt and it wont be the last. 

 

My circle of competence is increasing constantly, but at the same time, the number of crap companies I refuse to invest in also inceases.

 

I guess if stating the obvious qualifies as whining to you fine. We also agree to disagree, as to if the regulators dropped the ball badly and showed what a waste it is even having them. I've lost money and made money on lots of things, but never had the value so blatantly pilfered by insiders. I avoid a lot of companies were I have no respect for the ethics of certain large shareholders. Just another one to add to the list, lesson learned.

[Viking]

tyska, if ABH is getting such a great deal would it make sense to buy ABH? The possibility of getting  FBK at a low prices was one of a few reasons why I recently bought ABH.

[alertmeipp]

This thread may be used in future behavioural science classes as a case study in anchoring.

 

I think the main thing to take from all this, is how the regulators and Fairfax view minority shareholders rights.

 

Or they really wanted out.  Get over it.  I sold out of this between last winter 011. and december.  I lost money but I didn't sit around with an outsized position whining. 

 

Uccaml,

 

Please read up. They didn't just want out.

 

 

[alertmeipp]

This thread may be used in future behavioural science classes as a case study in anchoring.

 

I think the main thing to take from all this, is how the regulators and Fairfax view minority shareholders rights.

 

Or they really wanted out.  Get over it.  I sold out of this between last winter 011. and december.  I lost money but I didn't sit around with an outsized position whining.  My takeaways from this:

1) dont invest in commodity companies that pay no dividend.  I have held varying sizes of Canfor Pulp, since spring 09, and probably made 50% on dividends alone.  BTW, its on sale now, again.  The dividend will rise and fall with distributable cash, which should stabilize some as the power is bought on line.

2) Dont invest alongside FFH.  Buy FFH stock directly.  Dump a stock the day FFH initiates a rights offer.

3) LessthanIV is correct about anchoring.  Along the way we all built a thesis about the intrinsic value

of SFK.  In the meantime the price of pulp tanked.  Look at Mercer to a comparable example. 

4) You want to play the game, prepare to be burnt.  It isn't as if FFH or Pabrai made buckets of money on this one.  It isn't the first time I have been burnt and it wont be the last. 

 

My circle of competence is increasing constantly, but at the same time, the number of crap companies I refuse to invest in also inceases.

 

I guess if stating the obvious qualifies as whining to you fine. We also agree to disagree, as to if the regulators dropped the ball badly and showed what a waste it is even having them. I've lost money and made money on lots of things, but never had the value so blatantly pilfered by insiders. I avoid a lot of companies were I have no respect for the ethics of certain large shareholders. Just another one to add to the list, lesson learned.

 

 

I agree this is a case where minority shareholders being ripped off by the big guys.

Basically few companies can just team up and buy company A and then B, sign lock-up agreement with A to tender B to A at a below-IV value, force B minorities to either tender or to own a company without control.

 

 

[Uccmal]

This thread may be used in future behavioural science classes as a case study in anchoring.

 

I think the main thing to take from all this, is how the regulators and Fairfax view minority shareholders rights.

 

 

Or they really wanted out.  Get over it.  I sold out of this between last winter 011. and december.  I lost money but I didn't sit around with an outsized position whining. 

 

Uccaml,

 

Please read up. They didn't just want out.

 

 

 

Well that was obnoxious, Alert.  Of course they wanted out.  They made a bad investment years ago and wanted to get out.  FFh tried everything with this company.  This was the best course of action

at the time.  I have been in and out of SFK before FFH was ever involved.  Had FFh and Pabrai tried to sell these shares on the open market what would the price have been - I am betting 0.30.

 

[Guest Quebec]

"Had FFh and Pabrai tried to sell these shares on the open market what would the price have been - I am betting 0.30."

 

Mercer was knocking on their doors with a starting offer at 1.20

 

Had fbk been properly put in play it would have fetched even more. And that was before any PPA deal

 

[tyska]

tyska, if ABH is getting such a great deal would it make sense to buy ABH? The possibility of getting  FBK at a low prices was one of a few reasons why I recently bought ABH.

 

ABH is getting a good deal but it gets pretty diluted within the ABH structure. When the ppa goes through, it is a big percentage to FBK, but pretty small overall at ABH.

[rranjan]

 

 

Well that was obnoxious, Alert.  Of course they wanted out.  They made a bad investment years ago and wanted to get out.  FFh tried everything with this company.  This was the best course of action

at the time.  I have been in and out of SFK before FFH was ever involved.  Had FFh and Pabrai tried to sell these shares on the open market what would the price have been - I am betting 0.30.

 

Did FFH had higher offer from anyone else before agreeing for the lock up? If they refused higher offer then it means they simply did not want to get out. They had some other ideas to maximize values for them even if minority shareholders get a short end of the bargain.

 

If they did not have any higher offer then we can not fault FFH here for agreeing for the lock up.

[Guest Quebec]

It was disclosed that Mercer made an approach to Ffh for their fbk shares just before abh offer. They offered 1.20 but ffh replied they wanted 1.50 . Also, if i remember correctly, abh offered something like 1.65 earlier in 2011 (when the fbk stock was higher) but ffh turned them down. It's like to waited for the absolute low to sign with an irrevocable commitment to tender to abh, which happens to be huge investmemt of them

[Uccmal]

"Had FFh and Pabrai tried to sell these shares on the open market what would the price have been - I am betting 0.30."

 

Mercer was knocking on their doors with a starting offer at 1.20

 

Had fbk been properly put in play it would have fetched even more. And that was before any PPA deal

 

 

Pure conjecture.  It could have resulted in a race to the bottom as well.  If Mercer is such a white knight, where were they at the start.  They seemed real quiet for an awful long time.  There was nothing stopping Mercer from putting out an offer a day or week after the Lockup deal.  Mercer was trying to get it as cheap as they could as well.

 

So here you have it.  FFH/Pabrai agreed to a deal with ABH.  They obviously saw more value with a locked in deal with ABH than an unknown with Mercer.  Minority shareholders were free to entertain any other bid.  For some reason, not enough of them tendered to Mercer. I am guessing they were hoping for more from somewhere (where is a good question), or a bidding war.  ABH was not biting, and neither was Mercer.  So, now you have some pissed off minority shareholders, who are selling their shares for lower than the ABH bid.  ABH no longer has any reason to honour the deal, so you can look forward to the share price dropping steadily.  No market for the shares is exactly what would have happened had FFh and Pabrai dumped their shares.  It would have taken them 600 trading days to get rid of it all.  I bought fbk in 2009 at 0.35 per share.  Dont tell me it couldn't retrace its steps.

 

Canfor is still on sale today. 

[alertmeipp]

This thread may be used in future behavioural science classes as a case study in anchoring.

 

I think the main thing to take from all this, is how the regulators and Fairfax view minority shareholders rights.

 

 

Or they really wanted out.  Get over it.  I sold out of this between last winter 011. and december.  I lost money but I didn't sit around with an outsized position whining. 

 

Uccaml,

 

Please read up. They didn't just want out.

 

 

 

Well that was obnoxious, Alert.  Of course they wanted out.  They made a bad investment years ago and wanted to get out.  FFh tried everything with this company.  This was the best course of action

at the time.  I have been in and out of SFK before FFH was ever involved.  Had FFh and Pabrai tried to sell these shares on the open market what would the price have been - I am betting 0.30.

 

I didn't say they don't want out. I said "They didn't JUST want out", they want out AND they want to make sure their other LARGER investment get FBK cheap. And intentionally or not, hurt the minority shareholders' right to get the better offer.

[Uccmal]

It was disclosed that Mercer made an approach to Ffh for their fbk shares just before abh offer. They offered 1.20 but ffh replied they wanted 1.50 . Also, if i remember correctly, abh offered something like 1.65 earlier in 2011 (when the fbk stock was higher) but ffh turned them down. It's like to waited for the absolute low to sign with an irrevocable commitment to tender to abh, which happens to be huge investmemt of them

 

If that is all correct and documented then it looks bad on FFH/Pabrai.  However, if Maybe FFh genuinely worked out that getting ABH shares was a better deal than selling to Mercer.  Beats me how they would come to this conclusion, but what do I know.  Minority investors were still given another choice and collectively they did not take it. 

[alertmeipp]

"Had FFh and Pabrai tried to sell these shares on the open market what would the price have been - I am betting 0.30."

 

Mercer was knocking on their doors with a starting offer at 1.20

 

Had fbk been properly put in play it would have fetched even more. And that was before any PPA deal

 

 

Pure conjecture.  It could have resulted in a race to the bottom as well.  If Mercer is such a white knight, where were they at the start.  They seemed real quiet for an awful long time.  There was nothing stopping Mercer from putting out an offer a day or week after the Lockup deal.  Mercer was trying to get it as cheap as they could as well.

 

So here you have it.  FFH/Pabrai agreed to a deal with ABH.  They obviously saw more value with a locked in deal with ABH than an unknown with Mercer.  Minority shareholders were free to entertain any other bid.  For some reason, not enough of them tendered to Mercer. I am guessing they were hoping for more from somewhere (where is a good question), or a bidding war.  ABH was not biting, and neither was Mercer.  So, now you have some pissed off minority shareholders, who are selling their shares for lower than the ABH bid.  ABH no longer has any reason to honour the deal, so you can look forward to the share price dropping steadily.  No market for the shares is exactly what would have happened had FFh and Pabrai dumped their shares.  It would have taken them 600 trading days to get rid of it all.  I bought fbk in 2009 at 0.35 per share.  Dont tell me it couldn't retrace its steps.

 

Canfor is still on sale today.

 

1) the bid price is not $1 anymore as the ABH pps has dropped since.

2) We need 98% of the remaining shares to tender which is highly likely.

 

One thing we hope we can all agree on, MERC's offer was superior one.

[alertmeipp]

It was disclosed that Mercer made an approach to Ffh for their fbk shares just before abh offer. They offered 1.20 but ffh replied they wanted 1.50 . Also, if i remember correctly, abh offered something like 1.65 earlier in 2011 (when the fbk stock was higher) but ffh turned them down. It's like to waited for the absolute low to sign with an irrevocable commitment to tender to abh, which happens to be huge investmemt of them

 

If that is all correct and documented then it looks bad on FFH/Pabrai.  However, if Maybe FFh genuinely worked out that getting ABH shares was a better deal than selling to Mercer.  Beats me how they would come to this conclusion, but what do I know.  Minority investors were still given another choice and collectively they did not take it.

 

 

>> Minority investors were still given another choice and collectively they did not take it.

 

Do you know about Steelhead?

[SharperDingaan]

We do not know what happened with Merc, but they probably did not lose. As consolation prize, ABH may have given them the break fee, & covered their costs to date.

 

Odds are ABH will need to eventually bump their bid to get to 100%, but not until after the offer expires on May 04. Obviously it is now a new game.

 

Hindsight is 20/20. With a 2nd bidder in the mix holding out was the right thing to do, as was proven through 8 rounds of successive bidding. However it is a bet on probability, & you must be wrong at least some of the time.

 

 

 

 

 

 

 

[alertmeipp]

It was disclosed that Mercer made an approach to Ffh for their fbk shares just before abh offer. They offered 1.20 but ffh replied they wanted 1.50 . Also, if i remember correctly, abh offered something like 1.65 earlier in 2011 (when the fbk stock was higher) but ffh turned them down. It's like to waited for the absolute low to sign with an irrevocable commitment to tender to abh, which happens to be huge investmemt of them

 

If that is all correct and documented then it looks bad on FFH/Pabrai.  However, if Maybe FFh genuinely worked out that getting ABH shares was a better deal than selling to Mercer.  Beats me how they would come to this conclusion, but what do I know.  Minority investors were still given another choice and collectively they did not take it.

 

That was the part I hope u read up on.

 

I agree CFX is cheap. I may switch to either it or MERC after I somehow get out of FBK.

[alertmeipp]

We do not know what happened with Merc, but they probably did not lose. As consolation prize, ABH may have given them the break fee, & covered their costs to date.

 

Odds are ABH will need to eventually bump their bid to get to 100%, but not until after the offer expires on May 04. Obviously it is now a new game.

 

Hindsight is 20/20. With a 2nd bidder in the mix holding out was the right thing to do, as was proven through 8 rounds of successive bidding. However it is a bet on probability, & you must be wrong at least some of the time.

 

Check out CFX's result, with all those money spend on defending this takeunder and now the 8.5millions, FBK's financial will look awful.

 

>>Odds are ABH will need to eventually bump their bid to get to 100%, but not until after the offer expires on May 04. Obviously it is now a new game.

 

If they up their bid, would the ppl already tender get the better deal?

 

100% is way off base btw.

[Guest Quebec]

When the offer from abh came out with 46% hard locked up and steelhead commitment inside, they made it very hard for anyone else to make a bid since its almost impossible to reach 50%. That was meant to prevent other bids, to coerce minority. That's why Mercer was not there immediately with a superior offer, until fbk got creative with the warrants.

 

(i'm losing track with all the thread's growth)

[SharperDingaan]

Alert: The 8.5M consolation prize (if it occurred) would have been paid to Merc by ABH - to 'vanish'. When Merc pulled their bid, they gave up their right to get any fees from FBK. Q1 financials may also have other things in them overshadowing the results.

 

You get what the tender price is, after that - you don't own the shares anymore.

 

Page 6, para 4 &5 of the offer - ABH does not want minority shareholders; they intend a Subsequent Acquisition Transaction to remove them. 

[tyska]

Alert: The 8.5M consolation prize (if it occurred) would have been paid to Merc by ABH - to 'vanish'. When Merc pulled their bid, they gave up their right to get any fees from FBK. Q1 financials may also have other things in them overshadowing the results.

 

You get what the tender price is, after that - you don't own the shares anymore.

 

Page 6, para 4 &5 of the offer - ABH does not want minority shareholders; they intend a Subsequent Acquisition Transaction to remove them.

I totally missed that, it certainly is interesting that they would walk away from 8.5M.

[alertmeipp]

ABH down to 12.44. Won't be surprised if it goes below 10.

 

So, I am thinking whether just to wait it out or sell at the market, etc...?

 

Thoughts?

[Guest Quebec]

ABH down to 12.44. Won't be surprised if it goes below 10.

 

So, I am thinking whether just to wait it out or sell at the market, etc...?

 

Thoughts?

Alertmeipp: Few are giving up for 92 cents today. I'm waiting. I even bought a little more, averaging down. They want to delist and so will have to do something to incent and get this done timely, like bid more, or increase the cash enveloppe to satisfy all those wanting such (eg arb), or reprice with the current ABH stock price, for those who'd like to stick with them.

 

http://www.reuters.com/article/2012/05/01/resoluteforest-idUSL4E8G165A20120501

 

I'm wondering what's up with the PPA ?

 

 

[alertmeipp]

Got a call from my broker to ask me to take the last opportunity to take "advantage" of ABH's tender.

 

I ask them why they don't call me to take the last  opportunity to take "advantage" of MERC's tender before. No straight answer.

 

What a corrupted World.