Dear David,
Usually acquisitions are based on the price of the acquiring company's stock in exchange for the acquired company's net equity, cash value, good will and brand identification. If the price of the acquiring company's stock is down during the due diligence period, all other things being ok ,the Companies adjust the number of shares and make the exchange. If material problems are discovered even after the fact, the transaction can be unwound. Good Faith is the key factor.
In re-reading Tridon's Press Release of November 12, 1996 it states that " Maingate was not able to satisfy the various conditions precedent to the acquisition." That means that there was something wrong at Maingate. Further in the Release it states what was wrong, items 1,2,3& 4 make it clear that completing the transaction was not in the best interest of the company and the shareholders.
It could have happened that Bill Novodor, the fired Maingate president was caught making material misrepresentations to the acquisition and that he orcharestrated with Goldee and her crew a plan to distract Tridon's CEO hoping to force the deal and gain the advantage of being issued more shares for Maingate because the Tridon share price had eroded. If that was the case we should applaud the CEO for his diligence and unwinding the deal and keeping the company debt free. Their is no benefit to Tridon's shareholders in acquiring a bankrupt company under the guise of a profitable one. The Press Release says that Tridon advanced money to Maingate and has demanded its return.
We know Novodor lost his job at Maingate in early September, now let's find out exactly why. I think we may find that Manigate had no assets and Tridon's auditors discovered it, maybe just in time.
Looking back, Tridon stock was trading at approx $.25 per share before it announced its intent to acquire Maingate's assets. Tridon then benefited nothing and Goldee who boasted her market power could be trying destroy the price of the stock so that all of the MM's who are short the stock as high as $.90 per share can cover and make a huge profit on the back of the shareholders. The MM's are ruthless in these cases and money is their only incentive.
Robin
Robin |
