Hey Ken, I don't have the news article at the moment..FYI Mr. Eric T. Furey(Don't know if you read the all article), has high respect for the Glazers, As I recall..he had said that they are a great team to work for..and they know how to turn a failing business into success.
I guess we should listen to you, and get also Mr. Savitz from Barrons, maybe knock him over the head with a 2X4 for giving us the BS...Right?
Going Fishing... have fun with your few hundred bucks of daily trade.
Here is again to refresh your memory ram.
Barron's
July 13, 1998
Zapata Casts the 'Net, But Its Catches Aren't Fishy
By Eric J. Savitz
The time has come to stop laughing at Zapata. Zapata, to refresh your memory, is a Houston-based fish-processing company that several months ago decided to get into the Internet business. Founded in 1954 by former President George Bush, Zapata started life as an oil and gas company. More recently, Zapata's primary occupation has been squishing fish into meals and oils. A nasty job, but someone has to do it.
The transformation of Zapata into a cyber company began in late April, with its $2 million acquisition of Word and Charged, two 'Net-based magazines. In early May, ads appeared in The Wall Street Journal and the New York Times, proclaiming: "Zapata Will Buy Your Web Site." A few days after that, Zapata offered to acquire Excite, the Internet search engine, for $71 a share, or $1.7 billion. The Street thought this was absolutely hilarious, a fish processor buying a search engine, but otherwise ignored the offer. They more than ignored it; Zapata supplanted K-tel as the leading Internet joke stock. Zapata apparently found plenty of interest elsewhere, though. Last week, in fact, Zapata announced deals to buy 23 Web sites of various description. Among the acquisitions: a search engine called Starting Point, a 300,000-member chat site called CoolChat, several financial sites, and Bibliophile, a site that compares the prices offered by online dealers in out-of-print books.
Terms of the deals weren't revealed. However, Zapata CEO Avie Glazer contends the sites together would rank among the 10 highest traffic sites on the Internet. Indeed, he asserts that those sites would make Zapata among the 10 highest-revenue Internet companies in the public market. Seeing some serious problems trying to combine the company's other operations with its Internet interests, Zapata plans to divide in two. Its older operations will keep the Zapata name, while the Internet businesses will be combined into a new company called ZAP. Meanwhile, Zapata has transformed its Internet site, www.zap.com, into a nascent Web portal.
Now, before you write off Zapata as just one more manifestation of Internet insanity, consider a few facts. For one thing, Glazer and his tycoon dad, Malcolm Glazer, who together control 45% of Zapata's stock, are not as flaky as you might think. The Glazers have a long history in a wide range of businesses; among other things, they own the Tampa Bay Buccaneers of the National Football League. For another thing, Zapata shares have been quietly accumulated by some noteworthy investment pros, including the hedge-fund operator Rocker Partners and Robertson Stephens Diversified Growth fund, run by the respected fund manager John Wallace. Not least, the value of Zapata's basic operations is easy to compute; and even at the current stock price, Zapata's shares look cheap, especially for an Internet stock.
In an interview last week, Glazer himself laid out the case. Zapata, he notes, is a simple company to value. In April, Zapata's fish-processing operations, Omega Proteins, completed an IPO, with Zapata retaining a 60% stake, about 14.5 million shares. At the recent price of $16.50 a share, the position is worth $240 million. Zapata also holds about six million shares in a company called Envirodyne. With that stock around 6 5/8, the stake is worth roughly $40 million. Not least, Zapata has $117 million in cash. Aside from the new Internet business, that's all there is to Zapata. The three assets together total just under $400 million, or about $17.25 a share. That's about where the stock is trading. In essence, you get the Internet business free
Of course, the Internet acquisitions won't be done free; Glazer says they will be for a combination of cash and shares in ZAP. But he also says they won't meaningfully reduce the company's cash position. Moreover, Glazer says all but two or three of the Web sites being acquired are profitable, and he contends the deals will be immediately accretive.
Glazer notes that the Internet industry at the moment shows a huge disparity between public and private market valuations. It's what makes their strategy possible. "There's lots of opportunity to buy high-quality sites, with good revenues and audiences, selling at a fraction of what they would be worth as a public company." As you might surmise, then, Zapata intends to do many more deals. Joke about them, but they aren't going away. |
