I am constantly amazed at the "professionals" in this field. "Investors are attempting to get a discount below the $13 to $15 price range in the wake of a report in Barron's that insiders on the deal paid less than $2 per share to take the disk drive maker private two years ago, Morreale said." Now, is it that they didn't know this before, or is it that they are just using this as an excuse to not buy this deal, as it is now publicly disclosed that Seagate will be valued at something like 1x sales if it goes off at $13 or 14/share? And, as Barrons also pointed out and everyone who has posted on this board knows full well, not too many people have made any money buying DD stocks at 1x sales. It isn't unheard of, but the buyers better be traders with quick triggers at that price. And Barrons also pointed out that, while Seagate has a relatively low PE, especially for a tech leader, it was achieved in good part by virtue of an extremely low tax rate of 3%, due to rise in coming years to 35% as Singapore tax holidays come to an end.
I'm not sure why these guys at Silver Lake and Texas Pacific have such huge clout on the street to get this deal done, but somehow they seem to have it. Will be interesting to see if their clout extends to keeping the price levitated until the lockup period expires, when they can make their really really really big money, that Art Samburg was salivating about awhile ago in another Barrons interview.
So what would Seagate do if there aren't enough buyers at $12/share? Are they going to pull the offering with a huff and a puff? Or will their bankers come up with the risk capital themselves to get it off? Haven't SSB and Morgan made enough money off of Seagate (and us, the former shareholders of the company)? That's a rhetorical question--they NEVER make "enough" money, as we know. They are bluffing, IMO. They definitely do NOT want to wait another year to get this off. Their tax holidays won't be extended beyond around 2005, and they want to be able to sell their holdings well before that little fact looms too large on any prospective buyers radar screen.
Don't you just love that Merrill commercial, which ends something like, "There is always a good place for your money. Together, we can find it." Geez, how can anyone who has paid attention in the last few years not complete it by saying, "Well yeah, I know what you mean, in your bank account. Thanks but no thanks, guys."
Sam |
