Hi! Actually, I did read that part of the release (I don’t always read takeover bid releases this closely); I think I was specifically looking for sections concerning the board’s recommendation. I didn’t actually realize that it isn’t quite a standard entry, but indeed, it doesn’t seem to have been in recent offers at least. It is certainly interesting how they arrived at that, and why the other owners agreed to the terms if they aren’t quite standard. I’m more in a questioning rather than an asserting mode here, but I think, for example, the piece Karo linked here earlier was quite a credible-sounding description of the course of events and also the board’s role. It also clearly mentioned that if the board had not recommended Rettig-Apollo, the other owners would have been released from their commitments. This is indeed a very relevant observation; perhaps Apollo would have walked away then and Rettig would have decided that Haier was worth the risk after all, but I don’t know.
A bit of a side track to this discussion: a colleague of mine in the editorial department looked into the releases for Nokia’s Infinera offer. The SEC apparently requires companies to provide this kind of report where the tender offer process is reviewed roughly at the level of who has had coffee with whom, when, what was discussed, and how various decisions were reached (from page 120, ”Background of the Merger”). Incidentally, there was apparently also a higher offer than Nokia’s on the table here, but Infinera’s board didn’t want to take the risk.). Regarding this offer as well, I’ve wondered what prevents disclosing the background of the decisions more detailedly and directly a bit earlier. I understand that due to regulation, stock exchange releases must have certain things expressed in a certain way and certain things probably cannot be included, but in addition to that, there would surely be various possibilities to open up the background, as Rettig did now, a bit late.
Neither I nor my colleagues have any impediment to critically addressing the individuals on Alma Media’s board.
This is actually not true, contrary to what Karo writes. At least if the Rettig consortium’s offer document is to be trusted.
The share price is clearly already pricing in the arbitration court raising the redemption price. This is quite common; from recent years, at least the approximately 20% increases for Ahola Transport and Ahlstrom-Munksjö come to mind. In this case, there are even clearer justifications, including an acquisition made at higher multiples recently also involving Chinese buyers, the majority owner’s control and involvement in the purchasing consortium, exceptional commitment terms, a board member’s related parties not finding the offer attractive, and the demand for unusually high break-up fees from a credible buyer (It would also be nice to know how large the break-up fees Grand Bidco had in its original offer )
Interesting indeed, and not everyone had agreed, e.g., Jussi Capital, and many hopefully learned that they should not have agreed after seeing how the board failed to recommend Haier’s superior offer and thus prevented the cancellation of the acceptance commitments. Would the more relevant question be why such a condition was pushed from the Rettig consortium’s side? Could it be that Rettig knew the board was on their leash, in which case the condition in question would have made the acceptance commitments binding without a real possibility of cancellation?
Even though it is hard to believe this is true, the board justified recommending the inferior Rettig consortium offer mainly by stating that Rettig itself considered its own consortium’s tender offer to be better. The board surely understood that recommending Haier’s offer would have enabled the cancellation of the commitments given to Rettig’s consortium and thus in practice prevented the option they have now chosen to buy Purmo off the stock exchange. So, no Apollo withdrawal would have been needed as Karo wrote; instead, it should be obvious to everyone that from the Rettig consortium’s perspective, this option of redeeming Purmo from the exchange would no longer have been available, so of course they would have chosen differently.
If the board’s actions were legal, then in such a situation, a majority owner would have the power to legally buy the company off the exchange at their offered price with the help of a puppet board, even if someone else offered a 100% higher price—surely it cannot be like that, can it? Also, for those of you who do not seem to see the board’s responsibility, it would be desirable for the “conflict-free” members of Purmo’s board to have to respond to a claim for damages; perhaps this matter would become easier to see through that process.
Purmo managed to sell its Russian business yesterday after a long effort; naturally, this has no impact on the stock/situation at this stage. In any case, it was very small in terms of earnings.
Purmo announced an acquisition yesterday evening. Since the share is in a redemption process, this naturally has no impact on its value, and the deal was not very large anyway. Revenue will increase by about 4%, but there was no mention of earnings or the purchase price. The acquired business in the British Isles is apparently primarily the distribution of air source heat pumps manufactured by others, where margins will likely remain small. This is more in the nice-to-know category for those who are still following the company on some level.
Purmo’s Q3 report tomorrow, so here are Rauli’s preview comments.
Following the tender offer completed in August, the company is already 98% owned by Grand Bidco, and the redemption process for the remaining shares is underway. Consequently, the company will be delisted from the stock exchange in the coming months. The Q3 report will likely be the last in Purmo’s journey as a listed company, and in our view, its content no longer has an impact on the stock’s situation.
In all likelihood, the final official report on Purmo was published this morning. As the redemption process progresses, trading in the company’s shares will be suspended in the coming months, at which point official coverage will likely end as well. For those still holding shares, note that the third dividend installment (0.09 EUR) is being paid this week, which, according to my understanding, will lower the proposed redemption price accordingly to 10.97 euros.
The arbitral tribunal for the redemption has now been appointed. I noted from Caverion that it took over three months from the appointment of the arbitrators to the suspension of trading in that case, so Purmo’s delisting will likely stretch into next year, especially with the holiday season falling in between. The final dividend installment of EUR 0.09 is due for payment in mid-January, so those still holding on might still receive it.
Purmo issued a technical release today regarding the request to delist. This will be implemented once the arbitration court has confirmed Grand Bidco’s right to redeem the shares. According to my information, this would happen around mid-January.
Trading in Purmo was suspended today even before it began, and the company announced that Grand Bidco had acquired the right to redeem minority shares. In practice, the company’s stock market journey is thus over; the technical delisting will occur once the ownership of the remaining shares has been transferred.
Trading in Purmo also ended today, as the arbitration court made progress on the matter. It was acceptable for Grand Bidco to accept the value of Haier’s tender offer as collateral. It would almost be a surprise if the arbitration court did not set the redemption price at 13.59
"As stated above, the plaintiff has (secondarily) indicated acceptance of collateral, the amount of which has been calculated on the following grounds:
price per share 13.59 (tender offer consideration of Haier’s tender offer) multiplied by the number of shares to be redeemed 811,809 (13.59 x 811,809 =) 11,032,484.31 euros
interest 7.5% for a period of three years (11,032,484.31 x 7.5% x 3 =) 2,482,308.97 euros
the aforementioned total (11,032,484.31 + 2,482,308.97 =) 13,514,793.28 euros and rounded up to the next highest hundred thousand euros 13,600,000.00 euros."
Are minority shareholders paid in such a situation only after the arbitration court has determined the redemption price, or is it possible that an amount corresponding to Grand Bidco’s offer price is paid earlier?
This is sometimes almost impossible to predict. For example, in Efecte’s redemption, all signs pointed to the matter proceeding smoothly to completion, but the redeemer decided to pay the redemption price with interest only after the arbitration court’s decision became legally binding (i.e., more than 2 months after the decision). Then again, in Rovio’s case, the redeemer paid the so-called undisputed portion with interest long before the arbitration court’s decision, i.e., about 3 weeks after the suspension of trading. Grand Bidco has consistently highlighted how expensive this redemption will be and that the interest is terrible, so based on this, one might perhaps estimate that they will pay that undisputed portion with interest as quickly as possible, perhaps already during February-March, whereby interest would accrue approximately €0.31-0.42 per share on top of the redemption price. The arbitration court’s decision is expected during April, if the schedules hold.
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