Go Shop Ends SaturdayA few interesting facts on Go Shop provisions:
1. Historically only about 2% of Canadian M&A deals include Go-Shop periods. In the US this number is closer to 10%.
2. M&A Arbitrage portfolio strategies are much more likely to take a position in a deal with a go shop because of the higher probability of another bid emerging. The US historical data shows that 4% of all M&A deals end up having higher bids - this compares to 10% of M&A deals with a Go Shop having higher bids (data is since 2011).
3. If a higher bid materializes during the Go Shop (i.e. a Superior Proposal) it's typically not announced until the Go Shop period has expired. Boards have a fiduciary duty during a go shop to allow any higher bid to come in right up to the last minute.
4. If a higher bid is accepted during the Go Shop but announced afterwards then the bidder typically pays a lower break fee to the original bidder (in this case Beedie).
5. Post the Go Shop period, some deals have a Fiduciary Out provision. What this essentially means is that while management can no longer solicit additional bids it doesn't prevent the company from accepting one should it materialize. If a bid comes in post Go Shop with a bidder that was solicited during the go shop then often the break fee is lower. If however a new bidder emerges that the company didn't solicit during the Go Shop then that bidder will have to pay the full break fee.
In terms of implications for THNK shareholders, it's possible that a higher bid has been indicated however the board likely wouldn't announce until the Go Shop period has expired (which is Sat March 16th in the case of THNK). I wasn't aware of this typical procedure by boards when I had indicated an expectation that a deal if it materializes would occur late this week, so given that piece of information I think it more likely that we'll hear the outcome of the go shop early next week. Of course there always remains the very real possibility that no higher bids have occurred (and according to historical M&A deal data that's the case 90% of the time). Conversely, it’s also possible that negotiations with a bidder solicited during the go shop are continuing. Either way it seems that THNK shareholders may not have the clarity we hoped for simply because the Go Shop has expired.