There have been a lot of acquisitions of late that have involved one party in the nation of India, another somewhere else. For example, India's Reliance Industries in November offered to buy LyondellBasell Industries. Last month it sweetened that bid. Separately, Bharti Airtell has lately made a USD$9 billion offer for Zain Africa. This is its third attempt in two years to get an African presence.
Those are two instances in which Indian companies are the would-be buyer. But it stands to reason that Indian assets will come into the sights of outside corporations, as well. Accordingly, Sandeep Parekh, of the Indian Institute of Management, has offered us all a primer on Indian Takeover Regulation, which he calls "Under Reformed and Over Modified".
One paragraph from his abstract: "This paper argues that the complexity in the trigger points for disclosure and tender offer introduced over the years lacks a philosophy, and most of the amendments can not only be deleted but a very simple structure can be introduced making compliance of the regulations straight forward and easy to understand by management of listed companies. Certain other areas which need amendments have also been discussed. Chief amongst these are the provisions relating to consolidation of holdings, conditional tender offers, hostility to hostile acquisitions, definitional oddities, payment of control premium in the guise of non compete fees, treatment of differential voting rights, treatment of Global Depository Receipts and disclosure enhancements.
Showing posts with label takeover. Show all posts
Showing posts with label takeover. Show all posts
Wednesday, March 3, 2010
Sunday, May 18, 2008
Icahn enters the Yahoo fray
When last we looked in, Yahoo has successfully warded off takeover aspirations by Microsoft, using what looked like a scorched-earth defense chronicled here.
I've also mentioned, though I'm afraid I spoke rather slightingly about, the possibility of a Yahoo shareholder revolt, on the part of those who believe management should have sold the company to MS.
Well, nobody, not even a doofus such as myself, can speak slightingly of that scenario now. Yahoo has a full-fledged rebellion on its hands, led by the formidable Carl Icahn.
On Thursday, Icahn wrote to the board of Yahoo. It is "quite obvious," his letter said, "that Microsoft's offer of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis."
He said that over the preceding ten days (since MS had formally withdrawn its proposal) he had purchased 59 million "shares and share-equivalents of Yahoo," and formed a 10-person slate prepared to run a proxy campaign to replace the current board.
Yahoo replied the same day. They made several points, such as that the formal written offer from MS was for $31, not $33. They acknowledged that MS did indicate a willingness to go to $33, but this "was never delivered in writing and did not include details of a cash/stock mix."
Yahoo also maintains that during the negotiations MS never made clear its "thinking with regard to the regulatory issues associated with a potential transaction," and that their lawyers asked for additional information on that point on March 28, but it was never supplied.
Those of you with good instincts for corporate infighting might be saying "whoa there, back up!" Icahn's letter had mentioned a purchase of 59 shares, some of which weren't really of STOCK of Yahoo but were of something called "stock equivalents".
What exactly does that mean, and how much of Icahn's purchases are of "equivalents" rather than of real shares of stock? I'll look into that.
I've also mentioned, though I'm afraid I spoke rather slightingly about, the possibility of a Yahoo shareholder revolt, on the part of those who believe management should have sold the company to MS.
Well, nobody, not even a doofus such as myself, can speak slightingly of that scenario now. Yahoo has a full-fledged rebellion on its hands, led by the formidable Carl Icahn.
On Thursday, Icahn wrote to the board of Yahoo. It is "quite obvious," his letter said, "that Microsoft's offer of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis."
He said that over the preceding ten days (since MS had formally withdrawn its proposal) he had purchased 59 million "shares and share-equivalents of Yahoo," and formed a 10-person slate prepared to run a proxy campaign to replace the current board.
Yahoo replied the same day. They made several points, such as that the formal written offer from MS was for $31, not $33. They acknowledged that MS did indicate a willingness to go to $33, but this "was never delivered in writing and did not include details of a cash/stock mix."
Yahoo also maintains that during the negotiations MS never made clear its "thinking with regard to the regulatory issues associated with a potential transaction," and that their lawyers asked for additional information on that point on March 28, but it was never supplied.
Those of you with good instincts for corporate infighting might be saying "whoa there, back up!" Icahn's letter had mentioned a purchase of 59 shares, some of which weren't really of STOCK of Yahoo but were of something called "stock equivalents".
What exactly does that mean, and how much of Icahn's purchases are of "equivalents" rather than of real shares of stock? I'll look into that.
Sunday, October 28, 2007
Carl Icahn Helps Us Get Started
Carl Icahn wants BEA Systems to auction itself off.
BEA, a company founded in 1995 and headquartered in San Jose, Calif., sells software: largely to financial-services companies, although its products have other outlets as well.
Oracle wants to buy it. Not the software, the company. But BEA's management has allowed the deadline to lapse on Oracle's bid, ticking off Icahn, who doesn't think the stock is worth as much under current management as Oracle is offering. This is a classic set-up for a proxy fight, and Icahn is a grizzled veteran of the game.
This is also a good excuse for us to work through some terminology. Though sometimes used loosely, the words "takeover" and "merger" have in their strict use quite distinct meanings. A merger is the mutual decision by two companies to combine -- it involves a vote by both sets of shareholders. A takeover, on the other hand, is the buy-up of the shares of one company in the market by another.
A takeover can be either friendly or hostile. In the case of a hostile takeover, there are various defenses an incumbent board might put in place to limit a buyers' ability to attain a controlling share of the compnay equity -- we'll likely have a chance to discuss them if I continue writing this blog for any length of time.
But of course the chief reason for an acquirer to try to work within the corporate structure of its target and accomplish a merger is that going the takeover route can be tricky and costly if the target resists effectively.
What Oracle proposed was a merger. It's offering $17 a share, but the management of BEA has taken the position that this isn't enough. It wants a minimum of $21.
That seems quite a brassy demand, since BEA's stock was trading at about $14 in early October. It rose above $18 briefly after Oracle made this offer. In effect, investors bid it up to that level in the expectation that the $17 offer was just an opener, and that Oracle would sweeten it a bit. But as management's hostility to a deal became clear, the price sank below the $17 offering level, and closed Friday at $16.50.
Why do the BEA honchos think their firm is worth $21 a share? or are they just pretending to think so? We'll get to this tomorrow. Feel free to post your comments and tell me I'm an idiot if I'm getting any of this wrong. It's the only way I'll learn.
BEA, a company founded in 1995 and headquartered in San Jose, Calif., sells software: largely to financial-services companies, although its products have other outlets as well.
Oracle wants to buy it. Not the software, the company. But BEA's management has allowed the deadline to lapse on Oracle's bid, ticking off Icahn, who doesn't think the stock is worth as much under current management as Oracle is offering. This is a classic set-up for a proxy fight, and Icahn is a grizzled veteran of the game.
This is also a good excuse for us to work through some terminology. Though sometimes used loosely, the words "takeover" and "merger" have in their strict use quite distinct meanings. A merger is the mutual decision by two companies to combine -- it involves a vote by both sets of shareholders. A takeover, on the other hand, is the buy-up of the shares of one company in the market by another.
A takeover can be either friendly or hostile. In the case of a hostile takeover, there are various defenses an incumbent board might put in place to limit a buyers' ability to attain a controlling share of the compnay equity -- we'll likely have a chance to discuss them if I continue writing this blog for any length of time.
But of course the chief reason for an acquirer to try to work within the corporate structure of its target and accomplish a merger is that going the takeover route can be tricky and costly if the target resists effectively.
What Oracle proposed was a merger. It's offering $17 a share, but the management of BEA has taken the position that this isn't enough. It wants a minimum of $21.
That seems quite a brassy demand, since BEA's stock was trading at about $14 in early October. It rose above $18 briefly after Oracle made this offer. In effect, investors bid it up to that level in the expectation that the $17 offer was just an opener, and that Oracle would sweeten it a bit. But as management's hostility to a deal became clear, the price sank below the $17 offering level, and closed Friday at $16.50.
Why do the BEA honchos think their firm is worth $21 a share? or are they just pretending to think so? We'll get to this tomorrow. Feel free to post your comments and tell me I'm an idiot if I'm getting any of this wrong. It's the only way I'll learn.
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