Thursday, April 1, 2010

As predicted, SkillSoft buyout price is increased...but not by a lot. (SKIL)

The Skillsoft take-under will now be done at a slightly higher price of $11.25 per share, versus the initial $10.80. I consider this a disappointment, but when investment disappointments are a gain of 4%, we'll do just fine over the long haul.

Like others, I was aghast on the afternoon of Friday February 12th, when Skillsoft announced they agreed to be acquired for a far-too-cheap $10.80 per share.

I jumped in quickly and bought shares, encouraging others to buy also:

Later on I updated people with what I thought the buyers could do with the operating structure, allowing for a much higher bid:

Among reasons for a higher bid was the fury of the largest shareholder, Columbia Wanger Asset management. Again, here is the exchange between portfolio manager Ben Andrews and Skillsoft CEO Chuck Moran:
Ben Andrews: Good morning, Chuck. Just out of curiosity, why weren’t the larger shareholders consulted?
Chuck Moran: The reason the larger shareholders were not consulted is we are walking a fine line of Reg FD and we need to be very careful to what we communicate without tipping our hand and letting leakage get out. And I think that our experts and our Board’s opinion was that it would be a very limited window if we were to get a firm to acquiesce and sign an NDA, which they would have to do in advance to share the information and they would be reluctant to share the information without knowing what it was going to be involving and how long they would have to be tied up or locked up from trading. So it puts us in a very uncomfortable position of risking, leaking a potential offer or discussion and then we decided just to not pursue that.
Ben Andrews: Even though your largest shareholder has been an investor with you for some time and has gone through a fair bit of turmoil in you growing this company?
Chuck Moran: All those facts you’ve said are absolutely correct and all of our large shareholders and small but particularly large ones were in mind when he thought of that as an option. But we looked at the risk of putting the Company in as well as the risk for someone that then would be tied up and maybe wish they weren’t tied up in terms of their ability to trade and the Board decided that wasn’t the right approach.
Ben Andrews: Would you mind coming to see me, Chuck?
Chuck Moran: I’d be happy to.
Ben Andrews: Thank you.

So we've got our slightly higher price, but that didn't save investors who sold recently. On March 10th, Skillsoft announced that after a laughable exhaustive search, they couldn't find a higher bid for the company. Investors promptly sold off the stock on worries that irate shareholders would scuttle the deal. That was fine by me, as I'd initially written that I would NOT be buying after an announced deal if I wasn't happy to own the shares even in the absence of ANY deal.

As I said - this may be disappointing, but holding until the cash offer comes in will be a 4% gain for myself and my readers. If this is what we count as a disappointment, then we're in good shape.

Copyright 2010 AlphaNinja

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