Thanks, Paul. I do agree with you: as the example ANAD shows, a properly structured "Go-Shop" process works!
The ANAD process isn't directly comparable though. A Go Shop provision was not part of the original deal between MLNX and EZCH. In fact, there was a rather large (~$30 million) penalty if EZCH signed with someone else. As significant as this was, it was just one of many things wrong about the deal that prevented shareholders from receiving maximum value.
The original deal was going to be defeated by shareholders in November, so MLNX and EZCH tried again. This time, they added a "Go-Shop" provision at the insistence of Raging Capital and other shareholders, I believe. But it was only 30 days, which isn't much considering that in this case the original deal was structured to scare away other bidders. Furthermore, the new agreement explicitly gave MLNX to match any offer, which also could have scared away any other deals. After all, why invest in due diligence if the MLNX has the last word.
For an example of a properly structured Go-Shop, look at PMCS which was one of the comparables that EZCH mentioned in its proxy. Just after the proxy was published, PMCS received an offer from SKWS. I didn't follow it closely so please chime in if I'm incorrect, but the price of PMSCS roughly doubled over the next 90 days and it ultimately agreed to be acquired by MSCC.
BTW, wasn't it strange that MLNX itself was listed as one of the comparables in valuing its own acquisition of EZCH? In any case, the updated valuation data point for PMCS is now twice what it was on September 30.
These are the sorts of things that will likely lead to another NO vote. I personally hope that EZCH remains independent, but I am reasonable and know there is a price for every company. It's much higher than $25.50 for EZCH in my view. But it takes a fair and thorough process for a $1 billion+ transaction to occur, and this has not been done to my satisfaction. |
