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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (10257)	3/30/2000 11:12:00 PM
From: Madharry	Respond to of 78680

what I wonder about is how good a deal is it if the price of VRTs suddenly collapses 30%?

To: Paul Senior who wrote (10257)	3/31/2000 1:00:00 AM
From: James Clarke	Read Replies (2) \| Respond to of 78680

re: SEG Here's a quick way of understanding the Seagate deal. On Wednesday Paul owned .55 shares of VRTS, $5 in cash, Seagate's disk drive business (worth $10-40 depending on whom you believe), and valuable shares in a number of public and incubating technology companies (worth $10++?). Today (if he didn't already sell in disgust) he owns .45 shares of VRTS, $5 in cash, and that's it. The deal doesn't even give him all the shares of VRTS he already owned, let alone the other stuff. As Ben Graham wrote nearly 70 years ago, this is the kind of thing that happens when everybody forgets that a stock is ownership in a business. Not that you forgot that, Paul, and not that Seagate was a bad investment at the price you paid, but it should have been a much better investment for you. You and all other Seagate shareholders were literally robbed. Management (who are very direct beneficiaries of this deal) justified it by saying they looked for other bids and didn't get one, and this is a better deal than where it was trading in the market. Well there was a better deal out there. Spin off the VRTS shares directly to shareholders - give them all of what they own. Dividend the cash to shareholders. Even with just that shareholders are better off than they are under this deal. And they would still own Seagate's market leading disk drive business which could very well be bottoming in earnings and could triple in value in the next cycle, plus the other tech holdings. What a disgrace. I hope the company missed a D&O insurance payment so the Board members can be held personally liable for what they just did. I did not own the stock, but this is a matter of principle. What do we pay directors for if not to protect shareholders against a deal like this? Some investment bank is going to be paid to write a "fairness opinion" on this deal. I worked for one of the largest Wall Street investment banks' mergers and acquisitions department in a past life, so I think I know what I'm talking about here. This is the most shameless transaction I have ever seen.