Thanks for the info. Fred.
NM closed down 1/8 to 10 today, on volume of 148,200 shares.
As was evident by yesterday's trading, and especially today's trading, the buying interest has all but disappeared. This is neither good nor bad. It seems that the "interested buyers" have not been in the market since Friday. I have two reasons for this phenomenon.
First, if I recall correctly (I don't have my NM annual report with me), there are anti-takeover provisions in the stock. I believe that if an "interested shareholder" acquires 15% of the outstanding stock, National Media preferred stock is immediately issued, diluting shares outstanding. This is an attempt to make seizure of control of the company by an outside force very difficult. I believe the preferred stock would be worth $60 per share in common stock, but only cost $30 for a shareholder to convert it. Of course, the interested party would not be issued preferred stock, so their effective portion of the company's stock would be substantially reduced.
Obviously, any company interested in buying the company knows of this fine print in the 10-K. Accordingly, they are not going to exceed 15% before confronting the board of the company. This leads me to my second possibility. Actually, they are both related, and together most likely explain the slowdown in buying volume.
The interested buyers of NM stock have (there may be more than one party) reached 14.9% in ownership, and must identify themselves to the managament, and make known their intentions, since they cannot buy any more shares. As a result, buying has ceased. Also, now that they are talking to the company, it may be illegal to buy more, since that might qualify as trading with insider information.
So, I propose (and it's only my opinion) that NM is currently meeting with the potential buyer(s). I still expect the 13D to appear in the next few days. Since the 13D filing will be noticed by the public, the company and buyer will likely make an announcement regarding any possible deal. I think we'll hear something from the company this week.
TDW |
