GREY:STPJF - Post by User
Comment by
Eyeinvestoron Jun 04, 2014 10:56am
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Post# 22628775
RE:Immediate impact on SP after a sale announcement
RE:Immediate impact on SP after a sale announcement
Lutes cannot announce "The company has been sold".....because the company is not his to be sold.
What usually happens is the chairman of the board of directors announces that...The company has received an agreed offer of 49 cents per share from xyz and your board of directors recommends accepting this offer for the following reasons....The announcement includes a closing date for the offer and the acceptance forms are sent to every shareholder.
The stock continues to trade on the market during the acceptance period. It will either trade at a slight discount to the offer (most common) or a slight premium. It trades at a discount for 2 reasons (I) Because you are paying a rate of interest to get your money now rather than later (II) Because there is always a risk that a takeover falls through or doesn't get the requisite number of votes. It trades at a premium if the risk arbs think that this bid will prompt another bidder to make a higher bid. in this case, due to the strategic review, it will trade at a slight discount to the offer.
If there are strategic shareholders they may be included in the negotiations (via a non-disclosure agreement) for an "agreed offer" and they will announce that they have also agreed to accept the offer.
The negotiations will have got very interesting if the board wants to accept an offer and Sageview declines to accept. That would lead to intense prolonged negotiations. Remember Sageview is ex-KKR and they are tough cookies. If they cannot agree then either the bid goes away or (more likely), the board announces an "agreed offer" but at the same time declares that Sageview is not accepting the offer. Sageview is then released from its Non-Disclosure Agreement and can announce publicly why they are not accepting. The stock might go to a premium because the market will assume that Sageview are putting together a white knight "counter bid".
The deal has clearly been delayed. The stock is naturally weak as a result. We just don't know why the deal has been delayed. We know there was a deal on the table because of the announcement of suspension of capex. The delay has worried the investment community and I don't blame them.