Image Entertainment’s Buyout Collapses, Yet Again

March 4, 2009

Image Entertainment Is Yet Another Busted BuyoutImage Entertainment (DISK) went through a change in leadership over the last year with the retirement of Marty Greenwald, who was replaced by ex-COO David Borshell, but one thing hasn’t changed: its bad luck when trying to sell itself.

Readers of this space may recall that producer and entrepreneur David Bergstein, with the financial backing of real estate mogul Ron Tutor, had tried to buy Image early last year for $4.40 per share, beating a $4 bid from Lionsgate (LGF) – which now itself is under attack by Carl Icahn. The deal collapsed when hedge fund D B Zwirn ran into trouble with accounting, valuation and redemption woes and was unable to provide the promised funding. Read the rest of this entry »


Dirty War Over Wilshire Enterprises

February 25, 2009

Wilshire CEO and party girl Sherry Wilzig Izak with her brother "Sir Ivan"

Wilshire CEO and party girl Sherry Wilzig Izak with her brother "Sir Ivan"

The battle over Wilshire Enterprises between Phil Goldstein’s Bulldog Investors and Wilshire’s (WOC) CEO Sherry Wilzig Izak is gradually growing into a full scale war, if not a jihad. Among a string of litigation, the shareholder meeting was postponed from this week to March 24th, giving management crucial time to beef up their defenses that ultimately will be futile. We have previously chronicled the battle between Wilshire and Bulldog, which ended in a temporary defeat of Bulldog when management declared that “initial bids are in” for a prompt sale of the company. Almost a year after the initial bids, a buyer emerged for $3.88/share, down from $8.50 a few years ago when management rejected a bid by Mercury Real Estate as “undervalued”. Last year’s buyer didn’t have enough funds to acquire Wilshire, and the stock now trades just over $1.

With the date of the shareholder meeting approaching, the fight over Wilshire is heating up. Wilshire’s management is fighting hard to keep Bulldog out: Read the rest of this entry »


Tip For Roche: Pay For Genentech with Non-Cash CVRs

February 4, 2009

genentech logoIn an unhappy reminder of January 2008, deals continue to collapse or see reductions in price. After the trouble at Rohm & Haas (ROH), the acquisition of Genentech (DNA) by Roche is another large deal officially on the list of downward revisions in price. On Friday, Roche (RHHBY.PK) announced it would take a $86.50 per share tender offer directly to shareholders, Roche logodown from a $89/share proposal back in July. In the meantime, Genentech traded as high as $99.14 in anticipation of an increase in what was seen at the time as a lowball bid. Genentech’s board rejected the $89 bid as inadequate. Read the rest of this entry »


In Defense Of Securities Class Actions

September 24, 2008

Former shareholders of Chaparral Resources should receive the proceeds of the settlement with Lukoil (LUKOY) in the next few days. The settlement checks were mailed on Monday, we were told by a lawyer involved in the case. We have written about Lukoil’s shenanigans in the acquisition of Chaparral Resources before. As majority shareholder, Lukoil manipulated Chaparral to depress its stock price and acquire it at a low price. Shareholders filed a class action and are now, two years after the fact, finally receiving compensation. Read the rest of this entry »


Which Bank’s Problems Will Sink Angelica’s Buyout?

July 15, 2008

Angelica buyout mergerIn the pending buyout of Angelica (AGL) shareholders have not just the usual worry about the debt funding, but in an odd twist the equity portion could also be at risk. The financing consists of equity from an entity affiliated with stressed Lehman (LEH), while most of the debt is provided by struggling Regions Bank (RF), with some help from Apollo Investment Corporation (AINV) . Read the rest of this entry »


KeyBanc’s Poor Fairness Opinion In Max & Ermas Restaurants’ Buyout

June 24, 2008

Max & Erma'sLast week’s announcement that Max & Ermas Restaurants (MAXE) had a rough second quarter, with the weak economy and the March blizzard hurting top and bottom lines, made us wonder whether we should expect yet another busted buyout. After all, bad quarterly results have triggered quite a few merger cancellations, for the most part unjustifiedly. However, when we saw KeyBanc’s (KEY) deplorable fairness opinion we were convinced that the buyer is getting such a good deal that there is a lot of room for deteriorating performance before the deal will be called off. Read the rest of this entry »


Restoration Hardware Class Action Payout Still Leaves Shareholders Short Of Full Value

June 18, 2008

Restoration Hardware Logo

Shareholders of Restoration Hardware (RSTO) are the beneficiaries of a class action lawsuit against the buyout that saw the firm go to the low private equity backed bid rather than the higher bid from Eddie Lampert’s Sears Holdings (SHLD). Shareholders will receive an extra $0.19 per share from the litigation in addition to the $4.50 merger consideration. After legal fees, total payout should be roughly $4.63, a 2.9% increase over the price negotiated by the board. Nothing to make you rich, but a lot more than the annual dividend yield of the S&P index. The extra payout explains why Restoration Hardware trades currently a few cents above the $4.50 merger consideration.

Read the rest of this entry »


American Capital Strategies Pulls Out Of Merisel Buyout

June 10, 2008

Merisel logo

Another addition to the graveyard of busted mergers: business development company American Capital Strategies (ACAS) has terminated its agreement to buy Merisel (MSEL) under the “material adverse change” clause that has become a standard excuse for buyer’s remorse. After the exchang of multiple letters between the two firms, Merisel stock reacted predictably with a steep drop and now has a market capitalization below its net cash, despite generating positive earnings and cash flow in 2007. Read the rest of this entry »


Watchguard Private Equity Antitrust Litigation: The Sequel

May 19, 2008

Watchguard BuyoutThe dismissal of the anti-trust litigation against Watchguard and private equity funds Vector Capital and Francisco Partners got all the headlines (here, here, here) a couple of months ago, but a recently filed amendment to the lawsuit over directors’ breach of fiduciary duty makes much more fascinating reading than the somewhat dry anti-trust case. It is also likely to be another milestone in the unraveling of the private equity bubble, because it illustrates to what lengths some managers were able to go to do buyouts on their terms and not in the best interest of shareholders. Read the rest of this entry »


Wilshire Enterprises: Sale Or Delay Tactics?

May 5, 2008

While Wilshire Enterprises (WOC) is undergoing wild price swings in anticipation of the upcoming proxy battle at the July annual meeting, the nitty-gritty details in a recent amendment to its 10-K filing have shareholders wondering whether the long ago announced sale is coming shortly, or whether management is digging in for a long battle with 14.9% owner Full Value Partners, an affiliate of Phillip Goldstein’s Bulldog Investors.

Read the rest of this entry »


Merger Arbitrage Is Dead (Yet Again)

April 8, 2008

Declining returns on merger arbitrage funds Once or twice every decade, M&A markets go through a bust and returns of merger arbitrage and event-driven funds slip. It does not take long until pundits and performance chasing hedge fund investors ask: Is merger arbitrage dead? Read the rest of this entry »


Chaparral Resources Litigation Update: Lukoil’s Settlement Payment Coming Soon

March 13, 2008

The settlement of the shareholder litigation after Lukoil (ticker: LUKOY) bought out the minority shareholders of Chaparral Resources, Inc. has been approved by the court this morning. We documented the litigation and Lukoil’s egregious behavior in September 2006, and wrote about the settlement this January.

The net settlement available for public shareholders should come to $1.80 per share. This represents a 31% increase over the price Lukoil paid minority shareholders and shows quite clearly the success, albeit temporary, of the oil giant’s attempts to depress Chaparral’s stock price. Eligible to receive it are only shareholders who held Chaparral stock at the closing of the merger in September 2006. Anyone who sold before the closing will not be eligible to receive a payment.

Claim forms must be received by the claims administrator by April 12. Payment should be made shortly thereafter, but the exact timing will depend on the number of claim forms that need processing.

Thomas Kirchner manages the Pennsylvania Avenue Event-Driven Fund (PAEDX), which owned shares in Chaparral Resources, Inc. through the closing of the merger.


add to del.icio.us :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank