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   Strategies & Market TrendsSpeculating in Takeover Targets


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To: richardred who wrote (3564)2/27/2014 11:27:41 AM
From: richardred
   of 6544
 
RE-IQNT The possible takeover will have to wait. Sold on the good earnings news today. Locking in a big profit in short time span.

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To: richardred who wrote (3651)2/27/2014 12:35:46 PM
From: richardred
   of 6544
 
New buy today -OM Group Inc. (OMG) Reinvested IQNT proceeds.

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To: richardred who wrote (3648)3/4/2014 9:43:50 PM
From: Glenn Petersen
   of 6544
 
I think that the Sears stores are in a death spiral.

A New Form of Shareholder Activism Gains Momentum

By STEVEN M. DAVIDOFF
DealBook
New York Times
March 4, 2014, 6:16 pm

The aftermath of the Dole Food management buyout is showing that the new, new thing on Wall Street is appraisal rights. The battle being waged by hedge funds over appraisal rights in the Dole buyout just may be the tipping point, as hundreds of millions of dollars flow to the funds to pursue these actions.

Appraisal rights actions, according to a new paper by two law professors, Minor Myers of Brooklyn Law School and Charles Korsmo of Case Western Reserve Law School, are already skyrocketing in value. Last year, the value of appraisal claims was $1.5 billion, a tenfold increase from 2004. More than 15 percent of takeover transactions in 2013, the paper said, were subject to claims over appraisal rights.

So what are appraisal rights, you ask?

Shareholders sometimes have appraisal rights when the company they own stock in is acquired and they think the price is too low. Shareholders can ask a court to assess the fair value of their shares, with the hope that the court will agree that the price is not high enough and require that the shareholders be paid more.

Appraisal rights are protection for shareholders. If they think the takeover is a poor deal, they can seek a better price in court. Appraisal rights also serve to remind the buyer not to try to underpay. This is a particular problem in management buyouts, which have an air of “inside deal.”


If you followed the $24.9 billion management buyout of Dell, you may have read about the campaign by the activist investor Carl C. Icahn to get other shareholders to exercise their appraisal rights. The campaign fizzled for most shareholders, and even Mr. Icahn decided not to pursue his appraisal rights. This is because appraisal rights are not typically seen as a great remedy for the average shareholder. Shareholders have to pay their own legal fees and, depending on the state where the company is organized, the court can actually award less than the amount in the takeover.

In the Dell case, given that the company looked for other buyers and none came along, appraisal rights did not turn out to be a good option for most shareholders. It appeared that management’s price was probably as much as Dell could get in a sale, given its declining personal computer business. Still, about 2.7 percent of shareholders exercised appraisal rights, including T. Rowe Price.

It turns out, though, that the Dell campaign was a small step in a much larger fight, the one involving Dole Food.

Dole was involved in a management buyout last fall. The company was controlled by its buyer, David H. Murdock, its 90-year-old chief executive and chairman. The offer price of $13.50 a share was viewed by analysts and even some shareholders as underwhelming. At least one analyst put Dole’s fair value at $17.50 a share, and shareholder litigation disclosed that Dole had valued itself for lenders at more than $20 a share.

The Dole shareholder vote was a nail-biter, and the deal passed with only 50.9 percent of the public shareholders supporting it.

A few years back, this would have been the end of it. There is litigation pending, but its outcome is uncertain. And let’s face it, investors raised similar questions about the J. Crew sale to two private equityowners, and J. Crew and its new owners eventually settled a shareholder suit for $16 million. Now, the owners of the preppy clothing company are reported to be in preliminary talks with the Japanese retailer Uniqlo to sell the company at double the price they paid only a few years earlier.

In the wake of the Dole buyout announcement, four hedge funds — Fortress Investment Group, Hudson Bay Capital Management, Magnetar Capital and Merion Capital Group — bought about 14 million shares. They have now exercised their appraisal rights.

The hedge funds are all players in the appraisal game. Magnetar is still dissenting in the Dell case. Merion has filed at least 10 appraisal actions in Delaware, including two challenging the acquisitions of Ancestry.com and BMC Software. Merion is run by a former plaintiffs’ lawyer, Andrew Barroway, who used to be with Kessler Topaz Meltzer & Check, which won a $2 billion judgment against Southern Peru Copper, the largest award of all time in Delaware.

In all, about 25 percent of Dole’s public shareholders have exercised their appraisal rights.

Appraisal rights are risky and expensive, but they also have benefits for a hedge fund with a lot of money. One of the big benefits is that shareholders are generally entitled to statutory interest on the appraisal award at the Fed discount rate plus 5 percent from the time the deal is closed until the award is paid. The Fed discount rate is at 0.75 percent, meaning that the interest rate is 5.7 percent. In this market, that is a good return if you expect to at least get the merger price.

Buying shares and then filing for its appraisal right is also a good place for a hedge fund to park cash it may want to spend elsewhere. This has all been spurred by an earlier paper on the subject by Professors Korsmo and Myers, who found that there were significant returns to appraisal rights in recent years.

As a result, new hedge funds are specializing in appraisal rights. Merion has reportedly raised $1 billion. Another hedge fund, Patchin Value Master Onshore, specializes in filing small appraisal claims for $1.5 million of stock and had filed 16 such actions as of the end of 2013. Conferences are being held that focus solely on encouraging appraisal rights. All of this is driven by the fact that hedge funds are looking for new business outside the mainstream activist sphere.

The Dole appraisal rights battle is also a huge development in takeovers. Buyers can underprice their takeovers, but they are left with the “Dole problem” — the fruit and vegetable producer now has a potential liability that starts at about $190 million, the value of the stock exercising appraisal rights. Its opponents are hedge funds that will not go away lightly. They are going to litigate hard and will need to earn a return.

As a result, the battle over Dole will no doubt make others pursuing management buyouts hesitate before they act.

For now, though, appraisal rights are primarily benefiting the hedge funds. Institutions and individual shareholders are unlikely to plunge in full force, even if T. Rowe Price did so in the Dell campaign.

The question is whether there will be any pushback by companies. We are about to see many more actively litigated appraisal cases in the coming years. There will be complaints by corporations that the hedge funds are simply out to make easy money. Companies may lobby to make appraisal rights even harder to exercise to discourage the hedge funds.

Still, in fights over appraisal rights, you have real players putting their own money on the line. Not all shareholders are going to exercise their appraisal rights, but this is the way to make sure that the future management buyouts are not the Doles of the world, paying an underwhelming price. In other words, this may be the way that shareholders finally assert their power. You can thank the hedge funds for that.

Steven M. Davidoff, a professor at the Michael E. Moritz College of Law at Ohio State University, is the author of “ Gods at War: Shotgun Takeovers, Government by Deal and the Private Equity Implosion.” E-mail: dealprof@nytimes.com | Twitter: @StevenDavidoff

dealbook.nytimes.com


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To: richardred who wrote (3212)3/6/2014 10:37:28 AM
From: richardred
   of 6544
 
RE- QEPC Harper Brush wasn't completed, but the acquisition spree continues. No doubt to replace some business that will be lost due to a major retailer shifting it business mix.
Q.E.P. Co., Inc. Announces Acquisition of Faus Group, Inc.



Q.E.P. Co., Inc. Announces Acquisition of Faus Group, Inc.

BOCA RATON, Fla., Feb. 28, 2014 (GLOBE NEWSWIRE) -- Q.E.P. CO., INC. (OTC:QEPC.PK) (the "Company") today announced the completion of its purchase of all of the capital stock of Faus Group, Inc. ("Faus USA") from its parent company, Industrias Auxiliares Faus, S.L.U., in Spain. In addition to the stock purchase, the Company also purchased patents and other intellectual property applicable to the business.

Faus USA manufactures and distributes premium laminate flooring under the Fausfloor brand. Known for their commitment to innovation, Faus is a recognized industry leader when it comes to incorporating patented technologies into the design of its floors. These technologies allow Faus to offer floors that are more durable, provide a level of quality and realism not attainable by other manufacturers and with the wide plank design are easier and faster to install. With an eye on the environment, Fausfloor laminate floors are all Greenguard certified products. Faus USA operates out of a 380,000 square foot manufacturing and distribution facility located on over 78 acres in Calhoun, Georgia.

Mr. Lewis Gould, Chairman of the Company's Board of Directors commented, "The acquisition of Faus USA and its superior manufacturing facility in Calhoun, Georgia, will allow the Company to offer its customers a line of high end laminate products that complement the Harris Wood line of engineered wood products as alternatives to existing imported products. These QEP products provide customers with unique design choices and are all manufactured by American companies with American labor. In addition, QEP will supply a full spectrum of accessories to our customers from a single source."

Q.E.P. Co., Inc., founded in 1979, is a world class, worldwide provider of innovative, quality and value-driven flooring and industrial solutions. As a leading worldwide manufacturer, marketer and distributor QEP delivers a comprehensive line of hardwood flooring, flooring installation tools, adhesives and flooring related products targeted for the professional installer as well as the do-it-yourselfer. In addition the company provides industrial tools with cutting edge technology to all of the industrial trades. Under brand names including QEP(R), ROBERTS(R), Capitol(R), Harris(R)Wood, Homelux(R) ,TileRite(R) , Nupla(R), HISCO(R), Ludell(R), Vitrex(R), Plasplugs, PRCI(R), Porta-Nails(R) and Elastiment(R), the Company markets over 7,000 products. The Company sells its products to home improvement retail centers, specialty distribution outlets, municipalities and industrial solution providers in 50 states and throughout the world.

This press release contains forward-looking statements, including statements regarding the expected benefits resulting from the acquisition that involve risks and uncertainties. These statements are not guarantees of future performance and actual results could differ materially from our current expectations.

online.wsj.com




Faus Group Inc
Faus Group, Inc

100 Marine Drive SE
Calhoun, GA 30701 - View Map
Phone: (706) 879-4120
Web: Fausinc.com






Business Information Location Type State of Incorporation Annual Revenue Estimate SIC Code NAICS Code Employees
Single Location
Georgia
$20 to 50 million
242603, Floor Materials-Manufacturers
321918, Other Millwork Including Flooring
100 to 249

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To: Glenn Petersen who wrote (3653)3/6/2014 11:20:27 AM
From: richardred
   of 6544
 
>I think that the Sears stores are in a death spiral.

It would certainly seem that way. IMO Ironically Sears is referenced historically for it Catalog business. However it looks like Amazon has become the new Sears of today with the online catalog. RSH shutting down stores along with Staples.

RE: appraisal rights

I'm more familiar with the term, Dissenters Rights. For a small guy like my self. For myself personally. The only time I've ever get involved in a Unfair bids, is when I'm personally called to have my proxy solicited against a merger. FWIW- IMO one good strategy is for minority shareholder to pool together with major holders and not tender their shares. This to keep the acquiring company from getting enough shares to complete a merger. Of coarse, this could backfire, but if the company really wants to complete the merger. There's a good chance for a sweeten bid.

Definition of 'Dissenters' Rights'

State legislation that allows shareholders of a corporation the right to receive a cash payment for the fair value of their share, in the event of a share-for-share merger or acquisition to which the shareholders do not consent. Dissenters' rights allow dissenting shareholders an easy way out of the company if they do not want to be a part of the merger.

P.S. The last time I received a call from a proxy solicitor was for PRPX. I thought the board sold out the company at an unfairly low price.
Message 26326688

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To: richardred who wrote (3555)3/7/2014 1:29:14 AM
From: richardred
   of 6544
 
A biggie for Friday, but a low margin business. I've had Weis Markets, Inc.(WMK)on my watch list for some time, but never got down to pulling the trigger.

Cerberus confirms Safeway deal worth more than $9B

Text Size
Published: Thursday, 6 Mar 2014 | 5:14 PM ET


Private equity firm Cerberus Capital Management on Thursday confirmed a deal purchase grocery store chain Safeway for more than $9 billion.


As part of the deal, Cerberus would pay roughly $40 a share for Safeway, which includes $32.50 per share in cash.




Getty Images
Customers leave a Safeway store on March 5, 2014 in San Francisco, California.

In late trade on Thursday, Safeway shares traded at around $39.40. (Click here to track the grocery store chain's stock.)


Cerberus already owns Albertsons, which operates 1,000 stores and 12 distribution centers in 29 states and employs approximately 109,000 associates. The deal would greatly expand Cerberus' reach into the grocery store arena. Currently, there are 1,600 Safeway stores across the U.S. and Canada.

"This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country," said Albertsons' CEO, Bob Miller, in a statement.





Play Video



Cramer's Stop Trading: Workday & Safeway

CNBC's Jim Cramer explains why he thinks Workday is not done going higher, and weighs in on rumors of multiple suitors for Safeway.

Such a tie-up would vault it closer to the reach of Kroger, which operates 2,640 supermarkets and multi-department stores in 34 states and the District of Columbia.

Kroger, which completed its acquisition of Harris Teeter earlier this year, has also been considering a bid for Safeway.
cnbc.com|finance|headline|headline|story&par=yahoo&doc=101464756|Cerberus%20confirms%20Safeway

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To: richardred who wrote (3656)3/7/2014 2:05:41 AM
From: richardred
   of 6544
 
RE-Safeway takeover BTW not much of a premium, and not all cash. RE:After hours Looks like a take under for shareholders. Looks like Safeway shareholders will be praying for a White Knight. Kroger,or Maybe Walmart can convert the stores into Super Walmarts? <g>

P.S. A hypothetical WMT bid would be most interesting, but IMO not in their non limelight style. (Backlash & Regulatory) BTW Don't worrry, Walmart is quietly buying for E-commerce.
blogs.wsj.com

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From: richardred3/9/2014 6:03:12 PM
   of 6544
 
Company takeovers flood might be building

Matt Rourke | Associated Press Comcast has offered to buy Time Warner Cable for $45 billion, a deal that would boost its customer count to about 30 million.
NEW YORK — So far, 2014 is looking like the year of the big deal.

Flush with cash and high stock prices, companies are buying up the competition at levels not seen since the dot-com bubble. And with Washington providing more clarity on government-spending plans, CEOs are more confident that their expansion hopes will pan out — especially if the economy keeps growing.

In the past month, Comcast has offered to buy Time Warner Cable for $45 billion. Pharmaceutical giant Actavis is buying Forest Laboratories for $25 billion. And Facebook shocked the technology world by offering $19 billion for tiny WhatsApp.

Merger-and-acquisition executives say they have expected a pickup in deal activity for a couple of years, given the bull market in stocks and the economic recovery. But what prevented the really big transactions was uncertainty about the federal budget, the debt ceiling and the fate of President Barack Obama’s Affordable Care Act.

With those issues resolved — at least for now — the way has opened up for bigger, more-complex deals.

“The deals we have seen in the last couple of weeks are that tipping point that we’ve been waiting for,” said Mark Walsh, who heads the mergers-and-acquisitions practice at Deloitte, one of the world’s largest accounting and consulting firms. “There’s so much pent-up demand to do a deal now.”

U.S. companies announced $336.13 billion in deals in January and February, according to Dealogic, which helps banks and brokers. That’s up 31 percent from $256.21 billion during the same period last year. It’s the largest amount spent during the first two months of a year since 2000.

Companies announced 1,550 deals in the first two months of 2014, Dealogic said. Although that is fewer than in either 2012 or 2013, the average transaction size is more than double what it was a year ago.

The high prices reflect companies’ going on the offensive to boost earnings. The economy, while growing, still isn’t booming. Since the end of the recession, companies have had to act defensively — protecting profits by cutting costs through layoffs or benefit reductions, or by moving manufacturing elsewhere.

In an effort to lift earnings and please shareholders, S&P 500 companies also have announced plans for nearly $1 trillion in buybacks over the next several years, and more than four-fifths of them now pay a dividend, the highest proportion since 1998.

With their tool box nearly depleted, corporations “are looking for that extra bump” in sales now, Walsh said. A lot of Deloitte’s M&A business has been with companies “looking to expand their product lines or expand geographies.”

Buying Time Warner Cable would boost Comcast’s customer count to about 30 million, including the New York City market. For Facebook, WhatsApp is an opportunity to buy a fast-growing message service that is popular in emerging markets and Europe. Facebook CEO Mark Zuckerberg has said he expects WhatsApp, which has 400 million users, to grow to

1 billion users in the near future. Ireland-based Actavis gains both a broader variety of drugs to sell and a larger sales presence in the U.S. with its acquisition of Forest Labs.

Another example is the Japanese liquor company Suntory Holdings, which in January said it would buy Beam Inc., the maker of Jim Beam and Maker’s Mark, for $14 billion. The deals will “allow us to achieve further global growth,” said Nobutada Saji, president and chairman of Suntory.

Getting into the whiskey business is next to impossible, said Thomas Mullarkey, a stock analyst for Morningstar. The popular liquor needs to be aged in barrels for years. Although Suntory has a good niche market selling Japanese whiskey in Japan, it could never replicate or grow that business in the U.S. “It’s faster and cheaper for Suntory to buy Beam,” Mullarkey said.

Corporate finances also are strong. Companies have been hoarding cash on their balance sheets since the financial crisis, stashing away about $1.6 trillion, according to the Federal Reserve, and investors are increasingly demanding that companies decide what to do with it. Although investors like companies to keep cash on their balance sheets, having too much is like stuffing money into a mattress — it doesn’t do anything. Investors want to see money put to work, earning a return.

Companies also are able to make deals because financing is cheap. Interest rates remain low. The yield on the 10-year U.S. Treasury note, which is a benchmark for many types of loans, such as mortgages and corporate debt, is 2.78 percent. Also, investors are eager to buy corporate bonds, which makes financing a deal historically cheap.

Companies can use their stock, much of it trading at or near all-time highs, as currency.

Facebook is using mostly stock to buy WhatsApp. Comcast’s proposed merger with Time Warner Cable is an all-stock deal, and Actavis is using a combination of stock and cash to buy Forest Labs.

The high prices reflect the strength of corporate balance sheets and the confidence of CEOs, encouraging more deals.

“A healthy M&A market ultimately represents a flourishing economy,” said Martyn Curragh, head of U.S. deals for PricewaterhouseCoopers. “Seeing a big deal come together successfully helps bring confidence to other companies who are possibly looking at doing a deal,” he said.

“I don’t think we’ve seen the floodgates open yet,” Deloitte’s Walsh said, “but looking six,

12 months down the road, we’re definitely looking at a big increase.”

dispatch.com

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To: richardred who wrote (3657)3/9/2014 7:35:12 PM
From: Glenn Petersen
   of 6544
 
Safeway had announced that they were in talks about a possible sale in mid-February, when the stock was trading in the mid-30's. Rumors of a possible sale had actually been circulating for months. They exited the Chicago market in December (literally closing their 72 stores) in December and put about 6,000 people out of work. They had about a ten to twelve percent market share. Some of the locations will be reopened by other grocery chains,

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To: richardred who wrote (3655)3/9/2014 7:54:46 PM
From: Glenn Petersen
   of 6544
 
I've never hung around long enough to worry about dissenter's rights.

Two examples that highlight the difficulty for brick-and-mortar retail stores:

Retailers selling their products via Instagram (and not paying any commissions): Message 29430875

There is a ton of money being invested in online retailers:

Wayfair Raises $157 Million Ahead of Likely IPO

By Jason Del Rey
Re/code
March 7, 2014, 7:40 AM PST

Another day, another giant investment round for an American online retailer.

Wayfair said on Friday that mutual fund giant T. Rowe Price was leading a $157 million investment in the Boston-based seller of furniture and home decor, pushing total funding above $350 million.

The company, which was founded as CSN Stores 12 years ago, is widely believed to be gearing up for an IPO in the next year after it pulled in more than $900 million in revenue in 2013. The investment comes a month after competitor One Kings Lane, which sells higher end home furnishings online, said it had received an $112 million investment.

Wayfair sells discounted furniture, some of which are offered in short bursts in a model commonly referred to as “flash sales.” The model had been written off as an unsustainable fad in some circles, but fellow flash sales company Zulily went public in a successful IPO last year and industry pioneer Gilt Groupe is said to be planning to go public by year’s end.

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