Gatekeeper Systems Inc V.GSI

Could be failed takeover attempt

[OPFunds]

I don’t think this idea has been floated on this board yet, but this could have been a failed orchestrated takeover attempt. This is just my thought below.

An acquirer knows Doug (who owns close to 12% of the company) would not sell the company at unreasonable price below $2 per share (Doug even stated in his interview in October that there are outside interests in Gatekeeper specifically after Septa contract wins, but he would not exercise until reasonable offer).

The acquirer knew that to get any sort of meaningful number of shares on the open market would drive the price way above $1. So they decided to do a friendly maneuver, take 6.5mil shares at $1 that would put them at around 6% ownership based on fully diluted 110mil shares (~97mil currently outstanding including options + 6.5mil from PP + 6.5mil warrants). Then on the open market acquire additional up to 4% shares without any ownership disclosure and drive spot price above $1.35. At that time exercise 6.5mil warrants brining their ownership to ~16%. Afterwards force a small 30% premium takeover offer and they would only need additional ~17% votes to clear 33 1/3 votes required for a takeover.

And in the meantime, this would give them time to see how Gatekeeper is performing, get someone on the Board etc. This is a popular move by strategics or competitors when they know the current owner/CEO will not take a low-ball offer. Even PE shops could do this if they see a great value.

Again this is just my opinions, but I would say stay tuned. This show might not be over yet. Of course, Doug has to keep concentrating on running the business and avoid all these fiascos.

Cheers

[Torontojay]

Yes I mentioned about a possible takeover. It could still happen. 

[Ciao]

Let's not make this another distraction for the board.   IMHO, Doug will look for a way to appease shareholders. I'm expecting a state of the nation type NR before the end of next week where he will announce new contracts / business strategy.  Hopefully he will provide details of the failed PP.

[Torontojay]

Excellent post

[fergus2]

A very credible post OPF. Dyment knows what he's got here with GSI and he absolutely won't allow himself to be looted. I wish more members of the Stockhouse GSI board could fully appreciate what you are saying.  Please drop in again, from wherever you came from, and do it often.  Some here would benefit from your psychotherapy. 

[Ciao]

Flawed on the basis of what is required for a takeover.  Your premise is based on 33.3% approval by shareholders for a takevover.  The requirement is 66.6%.