Why the sellers are selling is always the big question on these deals.
According to my trusty calculator the stock at $2.80 represents a 10.7% return. Lets say (conservatively) it takes another 2 months to close the deal, that represents a simple annualized return somewhere around 65%. I'll live with that. I guess maybe there are some hot shot day traders in there who need the money to buy some Internet stock that's going to quadruple by next morning. I wish them luck.
The size of the discount on deals like this represents the level of risk anticipated by the market. If the deal was a 100% sure thing the discount would be somewhere around the T-bill rate. It is the fact that something could go wrong which justifies the discount. Therefore when I saw the stock breaking through a well established support price level I immediately began to wonder if somebody knows something that I don't. Hence my posting.
I did notice the following PR after the close indicating they wanted more time for DD. I'll be keeping my fingers crossed.
Brad
-------------------------------------------------------------------
October 23, 1998
Extension of Mailing Date for Bid Circular From Beaulieu of America
PEERLESS CARPET CORP ("PRG-TM;PSCCF-L")
- Extension of Mailing Date for Bid Circular From Beaulieu of America
Jeff Casselman, President and Chief Executive Officer of Peerless Carpet Corp. reports that pursuant to the announcement of the friendly take over bid being
launched by C&M Holdings (the offeror), an affiliate of Beaulieu of America for all of the shares of Peerless Carpet Corporation (the Company), the offeror has
requested an extension of the mailing date for the bid circular to October 30, 1998.
As previously announced on September 25, 1998, the Company entered into an agreement "company agreement" with the offeror, with the unanimous approval of
its board of directors. Said agreement calls for the offeror to purchase all the issued and outstanding common shares of the Company.
The Company agreement provides for a delay of 20 business days for the completion of due diligence matters. The offeror has requested additional time in order to
complete certain environmental audits related mainly to the facilities destroyed by fire on June 29, 1998. These facilities were not accessible until Tuesday October
20, 1998 pending cleanup of the debris.
Based in Dalton, Georgia, Beaulieu of America, along with its affiliates is a leading producer of broadloom carpets and area rugs in the North American market and
is the third largest producer of carpets and rugs in the world with sales to both residential and commercial customers.
Peerless Carpet Corporation is a leading Canadian manufacturer of tufted broadloom carpet and tufted bath and accent rugs, which are marketed under the names
Peerless, Peerless Ensemble, Peerless International, Barrymore, Devon Manor and Your Homestyle. Based in Acton Vale, Quebec, Peerless Carpet Corporation
has distribution in Canada, Australia, the United States and Europe. Company shares are traded on both the Montreal Exchange and the Toronto Stock Exchange
under the symbol PRG.
TEL: (450) 546-5034 PEERLESS CARPET CORPORATION
FAX: (450) 546-5067 Jeff Casselman, President and CEO
Raoul F.J. Heredia, c.a., CFO
TEL: (514) 731-0000 MAISON BRISON
FAX: (514) 731-4525 Rick Leckner
______________________________________
(c) Corporate Dissemination Services Inc. All rights reserved. |
