Investors in New York financial company MONY Group Inc. are clearly expecting a rival offer to the management-backed $2.3 billion bid it received this week from French insurance giant Axa SA.
MONY shares late Thursday, Sept. 18, were trading at $33.23 a piece — a 7.1% premium to the $31 a share deal Axa agreed to pay Wednesday, Sept. 17, to take over the U.S. insurer and money manager. The shares rose after shareholders berated MONY management on a conference call Thursday for selling out at too low a price.
"Everyone is predicting consolidation in the industry, and this is a relatively small company where you can rip out a lot of costs," said one shareholder who asked not to be named. He predicted there would be a rival bid.
Chairman Michael Roth, who hosted a conference call Thursday to plug his decision the day before to sell the company for $1.5 billion in cash and $850 million in assumed debt to Axa Financial Inc., a unit of the French insurance giant Axa, faced a barrage of criticism from shareholders.
"Your shareholders are going to vote against this transaction," predicted Richard Grubman of the Boston hedge fund Highfields Capital Management LP. "We're going to vote against it, and we're going to throw you out. Your shareholders couldn't have done worse without you."
Shareholders are unhappy with the $31 a share purchase price, which reflected a 6% premium to MONY's closing share price Tuesday. "Shareholders are getting their faces ripped off in this transaction," fumed Curtis Jensen, co-chief investment officer at Third Avenue Funds. "In this day and age of corporate malfeasance and management enrichment, this one is right up there."
Several accused Roth and his team of "enhancing rather than maximizing" shareholder value, and many demanded to know why there hadn't been an open auction for the business. Roth and his team admitted that the deal did include "change of control contracts" for management, a term they preferred to golden parachutes. However, they declined repeated requests to reveal the values of these contracts, saying such material would be brought out in proxy statements. |
