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Non-Tech : DEATHcare Stocks-Grim Reaper of Profits?
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To: HairyWho? who wrote (19)11/15/1997 10:24:00 AM
From: John Wasikowski  Read Replies (1) of 114
 
Loewen with his wife hold over 10% of the stock, enough to kill any deal without his approval.

SRV did not raise an offer of $45 in SRV stock. Mr. Loewen intimated that the company was worth over $60 at the time. Because of Mr. Loewen's great personal stake, he was a formidable force to be reckoned with. Importantly, LWN as an anti-takeover move rushed through a huge amount of acquistions, to make themselves less attractive to SRV. That rising debt, along with the staggering legal settlements that LWN was obligated for from the two large lawsuits, probably made SRV believe LWN was not worth pursuing at such a price.
Also, the companies took each other to several different courts, attracting the attention of the FTC and Loewen even invited states attorneys-general to investigate the dominance a combined SRV-LWN would have on local markets.

That is why I think any SRV-LWN merger now, would require it to divest of some nice locations, which no doubt STEI knows and would be willing to buy. STEI could win some very nice locations, and could have one major competitor no longer there at the bidding table. (Although a combined SRV-LWN would continue to have substantially deeper pockets than STEI.)

It is also possible for EQU and CRSV to pick up additional locations. But these certainly would not be as attractive as though STEI would acquire.

My personal hunch is we will not see a public bid for LWN. But we could see a merger (with key divestures) announced one day by SRV and LWN. Nonetheless, I think STEI would be the real winner anyway it shakes out.

John
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