M&A

In the bobsleigh race that is the annual M&A advisory battle, Morgan Stanley is just milliseconds behind the lycra bodysuit-clad Jamie Dimon. Read more »

  • 10 Jul 2013 at 11:42 AM
  • M&A

Carl Icahn: If You Like This Dell Buyout, Why Not Vote Against It?

I’ve made fun of Carl Icahn’s involvement in Dell a few times, because it has been pretty nutty and half-baked, but I hope that doesn’t obscure my fundamental fondness for the man. I sometimes think that we’re a lot alike: we both come to work every day with the goal of being amused by the financial world. He has billions of dollars, though, so he can create his own amusements. But then they become my amusements too, and I’m grateful.

Anyway this is pretty cute:

Dear Fellow Dell Stockholders:

We are in the process of perfecting our right to seek appraisal of our Dell shares and we believe that you should also perfect your appraisal rights. Under Delaware law if a merger occurs and you did not vote for it, you are entitled, through appraisal, to the fair value of your shares as determined by a Delaware court. We have done a great deal of due diligence concerning the value of Dell, and as we have said in the past, we believe the $13.65 merger price substantially undervalues your Dell shares, and we believe if you seek appraisal, you will receive more. BUT WHAT IS MOST IMPORTANT ABOUT SEEKING APPRAISAL IS THAT YOU CAN CHANGE YOUR MIND ABOUT APPRAISAL UP TO 60 DAYS AFTER THE MERGER AND STILL TAKE THE $13.65 PER SHARE. During the “free 60 day period” we believe Dell may wish to negotiate with those that sought appraisal and possibly pay a premium over $13.65 to get them to settle and drop their appraisal claims, as explained below. To add a new twist to an old saying, “you can have your cake and eat it too”.

What is he up to? Read more »

  • 08 Jul 2013 at 2:11 PM
  • M&A

Who Will Be Saddest About A Successful Dell Buyout?

With today’s ISS report endorsing the Michael Dell / Silver Lake buyout of Dell, and with the market up on the likelihood that the deal will go through when shareholders vote on July 18, I suppose it’s about time to start the postmortems. How do you see the winners and losers? The opposition, led by Southeastern Asset Management and Carl Icahn, look increasingly like goofballs. Like: here was Dell, with a cash takeover signed at $13.65 per share and no competing bidders in sight. Southeastern and Icahn teamed up delightfully to both sell low and buy high: Southeastern sold millions of shares at below the deal price,1 while Icahn’s average cost in his shares appears to be at least $13.70. Throw in his share of the proxy solicitation costs and he’s out about $12 million, plus whatever he paid for the rather uninspiring financing commitments for his hypothetical tender offer, though to be fair those seem to have been payable mostly to himself. Anyway here:2 [Update: wasn't counting the June $0.08 dividend in his basis; if you include that then he's basically breaking even rather than losing $12mm. Correct chart in the footnote.2A]

Is $12mm or so a lot for Icahn to lose? No obviously not. Read more »

  • 24 Jun 2013 at 11:50 AM
  • M&A

Who Else Wants To Weigh In On How Much Dell Is Worth?

There are people who think that a stock is worth what someone will pay you for it, but that’s sort of a boring conversation. Talking about fundamental, long-term, present-value-of-future-cash-flows type values gives much more scope for debate, analysis, and fantasy. See, this company is just trading at four dollars a share. It’s worth hundreds.

Normally you make those sorts of arguments in the usual way – you buy some stock, and if others agree with you they buy some stock too, and the stock goes up, and you have yourself a Keynesian beauty contest. But Gretchen Morgenson had a fun column this weekend about an exception, the appraisal-rights process. In this process, if you don’t like what you’re getting paid for your shares in a merger, you can go to a Delaware judge and ask him to decide how much your shares are worth, and he tells you, and then you get paid that amount (plus interest). You don’t have to convince the market that you’re right about the future cash flows. Just the judge.

This is normally a pretty boutique-y thing. Read more »

I submit to you that Michael Dell’s “presentation to investors” filed today will tell you everything you need to know about Dell, even if you don’t read it. Just look at it! Here, for instance, is the slide justifying the $13.65 price that Michael Dell and Silver Lake are paying to LBO the company:

Why is this a PowerPoint presentation? It’s all like this – 8 pages of dense bullet-point text, no graphics, no charts, no tables, no nothing. Just words. In complete sentences. Write a letter, man! You run a computer company. You have made a serious error in choosing the right software for your purposes.

The message of the presentation is the same mildly confusing message that Dell has been pushing for a while: Read more »

This is a not a phrase that you see a lot in the M&A context:

We want to thank Goldman Sachs for their interest in acquiring Ebix and we are naturally disappointed that we could not complete a transaction at this time.

Thanks guys! Really enjoyed getting to know you but it just didn’t work out. Because of the fraud.

Maybe? This Ebix situation is pretty weird. Ebix is a $400mm market-cap company ($800mm yesterday!) that makes, I don’t know, insurance software, or software insurance, or something. Also it may or may not be committing massive accounting fraud. In July 2011, a bunch of people sued it, either because it was committing massive accounting fraud or because they’re manipulative short sellers or just because of a big misunderstanding. The jury is still out,1 though the SEC is looking into it, so maybe there’s something to it?2 Read more »

  • 20 Jun 2013 at 11:40 AM
  • M&A

Smithfield Didn’t Want To Be Piggish In Its Merger Negotiations

I guess when you’re negotiating a merger you always think you’re being clever but when it’s reduced to the affectless blow-by-blow in a merger proxy it can sound a little silly:

On April 19, 2013, Parent [Shuanghui International] sent a revised non-binding written proposal to Smithfield increasing the price per share Parent was willing to pay to $33.50 per share in cash [from $33.00]. Contemporaneously with the delivery of this written proposal, representatives of Parent’s advisors communicated to representatives of Smithfield’s advisors that, while Parent had decided to increase its price by $0.50, the impact of the expected fourth quarter financial results was negatively viewed by Parent. In particular, Parent’s advisors noted that a transaction at this price would be more challenging from a financing perspective and that the expected weakness in Smithfield’s fourth quarter results had significantly limited Parent’s willingness to increase its proposed price and, in fact, that Parent even considered reducing the original proposed price of $33.00 per share in cash.

Oh? “We raised our bid, but JUST SO YOU KNOW, we wanted to lower it, so don’t push us.” Obviously they ended up at $34. Read more »