I think it is worth asking if your interests as a small shareholder are necessarily aligned with that of a large shareholder such as Pala Investments. If you think that $1.40 is solid value for the company, then the answer is obvious. On the other hand, if you think that $1.40 is a large discount to the true value of the company, should you welcome Pala and look forward to having more of the shares owned by a "strong long-term investor"? Here is a little story.
In May 2008, JMI Equity and The Carlyle Group offered to buy all of the shares outstanding of Gemcom Software International. Pala Investments was a large shareholder of Gemcom (owning about 20% of the shares). Pretty simple takeover offer; well, there is one more twist in this story. In July 2008, we learned that the offer was increased but that Pala Investments was now part of the buying group, partnering with JMI Equity and The Carlyle Group to buy Gemcom. The bid was successful and Gemcom is now a private company.
I do not know if Gemcom shareholders got solid value for their company. I do not know if Pala helped shareholders get a better price for the company. What I know is that Pala can buy companies and take them private and as such, Pala is not necessarily aligned with the interest of small shareholders.
If you were a shareholder of Neo Material, would you want to see Pala Investments own 40% of your company? Do you agree with the Board of Neo Material Technologies? Let me know.
CSC
Note: Once again, do your own due diligence.
5 comments:
Thanks for your posting. I saw NOVA Chemicals' takeover news this morning. nice to see some good news for a change for employees and shareholders in these bleak times.
I am hoping Neo is the next.
Ano,
Thanks for stopping by and good luck with your investments.
Regards,
CSC
Thank you CSC. It has been quiet since Pala fought back and TSE responded to the new shareholder rights plan. I am checking news everyday with the hope of get informed the latest updates on this partial offer. :P
What should we expect next? Are we suppose to receive something from Pala?
A few things could happen:
- Pala could raise its bid to get Board support;
- Pala could make full take over offer;
- Pala could challenge the new shareholder rights plan at the annual meeting in April;
- Neo could find a counter bid (Hitachi and Li Ka Shing come to mind since they both have deep pockets and already own some shares of Neo).
In the meantime, in its last press release, Pala said that it would file its offering circular promptly. Not sure how long it takes for shareholders to receive it.
CSC
Me again.
One interesting scenario would be neo Q4 08 results top estimates in early March and share price moves above 1.4.
What do you think Pala will do in that case?
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