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   Strategies & Market TrendsSpeculating in Takeover Targets

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To: richardred who wrote (2725)2/22/2014 9:41:27 AM
From: richardred
   of 6788
Ireland's Smurfit eyes acquisitions, hikes dividend
Wed Feb 12, 2014 3:25am EST

DUBLIN, Feb 12 (Reuters) - Irish packaging group Smurfit Kappa is looking for acquisitions in the Americas and eastern Europe and will return cash to shareholders if it doesn't find the right target, it said on Wednesday.

Smurfit, which designs and manufactures paper-based packaging for the likes of Unilever and Procter & Gamble, raised its dividend by 50 percent to 30.75 cents a share after posting a jump in fourth-quarter results.

Its shares rose 4.7 percent to 18.95 euros by 0817 GMT, supported by the higher payout to investors.

"Our focus is on doing M&A (mergers and acquisitions)," Chief Financial Officer Ian Curley told reporters. "If we don't find any to do, we will return capital to shareholders."

Smurfit, whose pretax profit rose 91 percent to 62 million euros ($85 million) in the fourth quarter, is looking at purchases in the high growth areas of the Americas and eastern Europe in particular, it said in a statement.

The company brought down its net debt by 6 percent in 2013 to 2.6 billion euros, which boosts its available cash.

"For a long time, the company used its strong cash generation to pay down debt. Now that the balance sheet has been repaired, shareholders should really start to get the benefit of the cash," said Barry Dixon of Davy Research.

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To: richardred who wrote (2822)2/22/2014 10:08:28 AM
From: richardred
   of 6788
Apple exploring cars, medical devices to reignite growth

Thomas Lee and David R. Baker
Updated 9:30 pm, Sunday, February 16, 2014

snip> Apple's potential forays into automobiles and medical devices, two industries worlds away from consumer electronics, underscore the company's deep desire to move away from iPhones and iPads and take big risks.

"Apple must increasingly rely on new products to reignite growth beyond the vision" of late founder Steve Jobs, said Bill Kreher, an analyst with Edward Jones Investments in St. Louis. "They need the next big thing."

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To: Glenn Petersen who wrote (3635)2/24/2014 9:21:15 AM
From: richardred
   of 6788
The saga continues with a higher bid.

Men’s Wearhouse Raises Bid for Jos. A. Bank

Men’s Wearhouse on Monday announced that it had increased its tender offer to $63.50 per share, up from the $57.50 per share it had offered previously, less than two weeks after Jos. A. Bank announced a plan to buy Eddie Bauer in what appeared to be an attempt to discourage the takeover attempt.

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To: richardred who wrote (3636)2/24/2014 10:18:46 AM
From: Glenn Petersen
   of 6788
Davidoff's article struck me as being hastily written. I kept waiting for a Pac-Man or Fat Man reference and it never came. He was more focused on the structure of the Eddie Bauer bid, although I have to admit that I had a hard time understanding how the structure would deter Men's Warehouse. Obviously, it did not.

As for Sears, I don't have a clue as to Lampert's end game. He has taken his time selling off or spinning out the various pieces while letting the stores deteriorate. I don't think that it will end well.

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To: Glenn Petersen who wrote (3647)2/24/2014 10:29:53 AM
From: richardred
   of 6788
In general the whole retail group is undergoing current weakness. As usual, weather is being blamed. IMO However, online retailing is making major inroads.

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To: richardred who wrote (3508)2/24/2014 12:13:55 PM
From: richardred
   of 6788
Sold PTIE today. Out with a gain. I'm not willing to wait any longer for possible FDA action in the future.

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To: richardred who wrote (3630)2/25/2014 1:24:51 PM
From: richardred
   of 6788
Conversant’s Appeal Grows With Sharper Focus: Real M&A

By Laura Lorenzetti Feb 25, 2014 10:01 AM ET dIn

Conversant Inc. (CNVR) is gaining appeal as a takeover target after the company formerly known as ValueClick Inc. sold website businesses to focus on digital-advertising technology.

The $1.65 billion company, which divested sites including Investopedia this year while increasing its presence in digital-video advertising, may attract traditional agencies such as WPP Plc (WPP) as they seek to gain proprietary technology, said Lake Street Capital Markets LLC. Its relatively low valuation could draw buyout interest, according to S&P Capital IQ.

Conversant trades at a lower multiple of projected profit than 91 percent of peers in advertising and marketing, according to data compiled by Bloomberg. Macquarie Group Ltd. said Conversant’s narrowed focus and the growth prospects for online marketing could increase its appeal, with the market for digital video advertising projected by Frost & Sullivan to more than double by 2016.

“It’s an attractive space, and it’s viewed as a high-growth space,” Tom White, a New York-based analyst at Macquarie, said in a phone interview. “Buying it is probably a little less complicated” after the website divestitures.

A representative for Westlake Village, California-based Conversant said the company doesn’t comment on speculation, when asked whether it would consider a sale.

Conversant’s technology helps marketers personalize ads and target users based on their previous Internet searches on mobile or desktop devices. It is one of the leaders in affiliate marketing, which matches advertisers with the best online placement to drive Web clicks, according to White at Macquarie.

Narrowed Focus Conversant this year sold its content websites, which also included PriceRunner and, while changing its name. It also bought SET Media Inc., a video technology company, to help strengthen its position in a digital-video advertising market that’s projected to grow to $15 billion by 2016 from about $7 billion last year, according to Frost & Sullivan.

“Obviously a lot of change has gone on at the company,” Scott Kessler, a New York-based analyst at S&P, said in a phone interview. “Across a number of different kinds of metrics and financial data, there’s a lot to like.”

Conversant, which gained 24 percent since announcing its website divestiture plan in November, still has a lower valuation than most peers. It trades at 13.5 times its projected profit for 2014, compared with a median price-earnings multiple of 22 for advertising and marketing companies valued at more than $1 billion, according to data compiled by Bloomberg.

The stock fell 0.2 percent to $24.69 at 9:59 a.m. in New York today.

Digital Value “Certainly there’s value in what they have,” Shyam Patil, an analyst at Wedbush Inc., said in a phone interview. “The stock isn’t terribly expensive.”

Large advertising agencies such as WPP or Publicis Groupe SA (PUB), which is merging with Omnicom Group Inc., could show interest in Conversant, said Eric Martinuzzi, an analyst with Minneapolis-based Lake Street.

“Those classic offline agencies, they don’t want to keep losing wallet share to the digital side of the house,” Martinuzzi said in a phone interview. “So, what happens is they will acquire digital ad services companies to defend that wallet share.”

A representative for London-based WPP declined to comment, while a representative for Paris-based Publicis didn’t respond to a request for comment outside of normal business hours.

Other Buyers Less traditional advertising-focused companies such as Internet retailer Inc. (AMZN) or software provider Adobe Systems Inc. (ADBE) also may want access to Conversant’s online technologies, said Macquarie’s White.

Adobe is among software providers that have been expanding in digital marketing and advertising. Last year, it acquired Neolane, which makes tools to help marketers reach consumers through personalized campaigns via the Internet, e-mail, mobile devices and direct mail.

Also last year, Inc. (CRM) expanded in online marketing with its $2.5 billion purchase of ExactTarget Inc.

“Companies like Adobe have been quietly scooping up and buying digital ad assets over the past couple of years,” White said. “The overall industry is growing at a nice clip.”

Representatives for Seattle-based Amazon didn’t respond to a request for comment. San Jose, California-based Adobe doesn’t comment on speculation.

Bearish Bets Conversant could struggle to find a buyer for the whole business since its collection of assets covers a broad range of services, Patil at Wedbush said. Prospective purchasers may only want specific pieces of the company, such as the higher-margin affiliate business or proprietary media technologies.

“It’s hard to see who exactly the buyer might be,” he said.

Some investors are betting against Conversant.

About 15 percent of the company’s shares outstanding were sold short as of Feb. 21, according to the latest data compiled by Markit, a London-based provider of financial information. That compares with 3.9 percent for the average stock in the Russell 2000 Index. In a short sale, traders sell borrowed stock on the assumption the price will decline, allowing them to make money by buying it back at a lower price.

While bearish bets remain high, the level has dropped from a peak of 18.3 percent earlier this month, according to Markit.

Conversant’s market value of less than $2 billion makes it digestible for a private-equity firm that may see opportunities to further streamline the business and get more out of its assets, said S&P’s Kessler, who sees a range of possible buyers.

“There are some important assets and businesses that they have in a category that’s seen as still offering not just growth, but long-term strategic relevancy,” Kessler said. “I think it makes sense.”

To contact the reporter on this story: Laura Lorenzetti in New York at

To contact the editor responsible for this story: Beth Williams at

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To: richardred who wrote (3564)2/27/2014 11:27:41 AM
From: richardred
   of 6788
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 6788
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 6788
I think that the Sears stores are in a death spiral.

A New Form of Shareholder Activism Gains Momentum

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 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: | Twitter: @StevenDavidoff

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