Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Seeker of Truth who wrote (54656)	10/21/2004 10:28:47 PM
From: Taikun	Read Replies (1) of 74559

Yes, but if the remaining shareholders feel shafted you'll get a post- Daimler Chrysler style lawsuit. Therefore the highest bidder to the controlling shareholders may trigger a sale but post sale litigation can revalue the deal, even if the litigation is not successful, because if the controlling sells for +10% and there is a lawsuit by 1/3 the holder claiming 20% and investment bank can look at that and say the deal should have been at +15%. Once the deal is revalued, there is a new comp for the industry to do new deals. If Minmetals buys Noranda for a 10% premium and that generates a lawsuit and the premium is deemed to be too low and should have been 15% then the next deal, say MinMetals buys the oil sands, the premium will reflect the new reality and not the face value of the former deal. Moreover, if the lawsuit is successful the deal will be revalued post-deal. Brascan is asking for a lawsuit if the premium is too low. Majority shareholders will try to shaft minority and they will get push-back.

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