Each party also granted the other the option to purchase 14.9% of the other party's common stock. Any thoughts on this?
The 8-K holds a panoply of interesting tidbits for those who are interested in this sort of thing (any volunteers? -:)). As I read the 8-K, the mirror options to purchase 14.9% of the counterparty's stock were entered into simultaneously with the Merger Agreement. Henry and Boylan could have been thinking of several possible scenarios. The most likely, in my mind, would be to deter a possible hostile bid for either party in order to foil the merger and/or for positive acquisition objectives. If the options were exercised, the target would now be encumbered (presumptively) by representation of the unwanted party on the board; also, the 14.9% of stock would not be tendered in any hostile offer and, when added to the positions of any friendly stockholder positions (Malone's, Murdoch's, for example, or Thompson) might be adequate under local laws to thwart acquisition of a sufficient percentage to force a short-form merger or other coercive measure.
Less likely, unless the options survive any termination of the merger for HSR or other issues, would be to preserve a modicum of corporate affiliations through common ownership, but I don't know what 14.9% would achieve in any concrete sense. There might be other charter/local law reasons for entering the mirror options.
The other provisions of the 8-K are a bit peculiar, as many of these (stockholders' agreement, voting agreement, employment agreements, GMST by-laws and charter revisions to change GMST's jurisdiction of incorporation to Del from BVI's, I think) would normally be entered into at the time of the merger agreement (and not after) so all parties knew in advance the entire terms of the deal.
As I can not at this time read the exhibits themselves [Caveat: I could not get the exhibits to download in full as I don't have the necessary plug-in--I'll try to do it from the office time permitting--so the information in this post suffers from lack of access to the complete underlying docs] , I can not see what the actual amendments to the Merger Agreement are. But from the context of the other exhibits in this filing, my GUESS is that they might be technical in nature. Hope this helps.
Steve |
