MRV Communications, the California based networking-ethernet company that recently endured an SEC stock-options examination unscathed, will hold its annual shareholder meeting on Veterans' Day, November 11, at the Warner Center Marriott in Woodland Hills, Cal.
The record date is September 28. [That is: if you were a shareholder of record as of that date, you'll have a vote.]
the company's nominees for the nine-member board are: Noam Lotan, Shlomo Margalit, Baruch Fischer, Harold Furchtgott-Roth, Joan Herman, Guenter Jaensch, Michael Keane, Igal Shidlovsky and Daniel Tsui. The company proxy materials say that seven of those nominees would count as independent directors as defined in the rules of the Nasdaq Stock Market. The two non-independent nominees are the CEO and the incumbent chairman, Noam Lotan and Shlomo Margalit, respectively.
In addition to being the chairman, Margalit is described as "Chief Technology Officer and Secretary."
I've written a bit about MRV in this blog recently: here and here.
What I should add is that the opposition to the above slate seems to be led by the Spencer Capital fund group. One of their complaints with regard to the alleged mismanagement of the company goes back to the Fiberxon acquisition more than two years ago.
In the original merger agreement, MRV and Fiberxon agreed that the closing of the merger would be conditional upon the delivery to MRV of Fiberxon's audited consolidated financial statements. But on June 26 of the same year, MRV agreed to an amendment to the merger agreement that dropped that requirement.
Spencer Capital charges that the board thereby demonstrated its lack of regard for the shareholders of the company, and its incompetence.
Showing posts with label merger. Show all posts
Showing posts with label merger. Show all posts
Sunday, October 4, 2009
Monday, January 21, 2008
Insider Trading and mergers
About a year and a half ago, Gretchen Morgenson of the NY Times wrote a story with the lead, "The boom in U.S. corporate mergers is creating concern that illicit trading before deal announcements is becoming a systemic problem."
It wasn't merely US mergers she was concerned about, though, despite the wording of that lead. She cited a study by the UK's answer to the SEC, their Financial Services Authority: that showed that in 2004, 29% of companies involved in mergers experienced abnormal trading before public announcements. The FSA also said that in 2001, the comparable figure had been 21%.
What accounts for the increase? Perhaps it simply became more difficult to keep a secret between 2001 and 2004.
Ms Morgenson also quoted a money manager named Herbert Denton: "Martha Stewart got hurt very badly for something that happens every single day on Wall Street. It's a falseness and a hollowness to the capitalist system when you are pretending that things are pristine and they are not. Either the SEC should get very, very serious and prosecute a lot of people or forget about it."
I'd raise my hand for the second option there. "Systemic problem" solved.
It wasn't merely US mergers she was concerned about, though, despite the wording of that lead. She cited a study by the UK's answer to the SEC, their Financial Services Authority: that showed that in 2004, 29% of companies involved in mergers experienced abnormal trading before public announcements. The FSA also said that in 2001, the comparable figure had been 21%.
What accounts for the increase? Perhaps it simply became more difficult to keep a secret between 2001 and 2004.
Ms Morgenson also quoted a money manager named Herbert Denton: "Martha Stewart got hurt very badly for something that happens every single day on Wall Street. It's a falseness and a hollowness to the capitalist system when you are pretending that things are pristine and they are not. Either the SEC should get very, very serious and prosecute a lot of people or forget about it."
I'd raise my hand for the second option there. "Systemic problem" solved.
Sunday, January 20, 2008
Insider Trading
Here's a link to a discussion of insider trading -- specifically, an interview of law professor Henry Manne, who believes most such trading ought to be legal click here.
I bring it up specifically because I've been thinking about mergers, and an impending merger is one of the classic contexts in which charges of insider trading arise. I'll refer to inside traders as ITs for short.
A merger offer, as we discussed here last week, will generally involve a "control premium," i.e. a price for the stock of the target company above its market value. If one were aware ahead of time that such an offer was, well ... in the offing ... one would of course start scooping up the stock in order to sell it again after the offer has become public and the control premium is on the table.
The big question is: who does the IT cheat? and how?
The IT certainly isn't committing a fraud in the classic sense. At common law, a fraud is a misrepresentation by one party upon which the counter-party relies, to the counter-parties' legal detriment. If the IT buys up stock of a merger target through a public exchange, it seems to me just stretching a point to the point of torture on the rack to claim that the sellers of that stock are reliance upon anybody's representation (through silence) that there ISN'T any merger in the works.
Furthermore, in general the sellers will get a higher price if there has been some leakage of word of the impending merger than they'll get if there hasn't been, so clamping down on the ITs and limiting the buying in the pre-announcement period is what does them hard. Not the IT, but the prosecution thereof.
More tomorrow.
I bring it up specifically because I've been thinking about mergers, and an impending merger is one of the classic contexts in which charges of insider trading arise. I'll refer to inside traders as ITs for short.
A merger offer, as we discussed here last week, will generally involve a "control premium," i.e. a price for the stock of the target company above its market value. If one were aware ahead of time that such an offer was, well ... in the offing ... one would of course start scooping up the stock in order to sell it again after the offer has become public and the control premium is on the table.
The big question is: who does the IT cheat? and how?
The IT certainly isn't committing a fraud in the classic sense. At common law, a fraud is a misrepresentation by one party upon which the counter-party relies, to the counter-parties' legal detriment. If the IT buys up stock of a merger target through a public exchange, it seems to me just stretching a point to the point of torture on the rack to claim that the sellers of that stock are reliance upon anybody's representation (through silence) that there ISN'T any merger in the works.
Furthermore, in general the sellers will get a higher price if there has been some leakage of word of the impending merger than they'll get if there hasn't been, so clamping down on the ITs and limiting the buying in the pre-announcement period is what does them hard. Not the IT, but the prosecution thereof.
More tomorrow.
Sunday, October 28, 2007
Carl Icahn Helps Us Get Started
Carl Icahn wants BEA Systems to auction itself off.
BEA, a company founded in 1995 and headquartered in San Jose, Calif., sells software: largely to financial-services companies, although its products have other outlets as well.
Oracle wants to buy it. Not the software, the company. But BEA's management has allowed the deadline to lapse on Oracle's bid, ticking off Icahn, who doesn't think the stock is worth as much under current management as Oracle is offering. This is a classic set-up for a proxy fight, and Icahn is a grizzled veteran of the game.
This is also a good excuse for us to work through some terminology. Though sometimes used loosely, the words "takeover" and "merger" have in their strict use quite distinct meanings. A merger is the mutual decision by two companies to combine -- it involves a vote by both sets of shareholders. A takeover, on the other hand, is the buy-up of the shares of one company in the market by another.
A takeover can be either friendly or hostile. In the case of a hostile takeover, there are various defenses an incumbent board might put in place to limit a buyers' ability to attain a controlling share of the compnay equity -- we'll likely have a chance to discuss them if I continue writing this blog for any length of time.
But of course the chief reason for an acquirer to try to work within the corporate structure of its target and accomplish a merger is that going the takeover route can be tricky and costly if the target resists effectively.
What Oracle proposed was a merger. It's offering $17 a share, but the management of BEA has taken the position that this isn't enough. It wants a minimum of $21.
That seems quite a brassy demand, since BEA's stock was trading at about $14 in early October. It rose above $18 briefly after Oracle made this offer. In effect, investors bid it up to that level in the expectation that the $17 offer was just an opener, and that Oracle would sweeten it a bit. But as management's hostility to a deal became clear, the price sank below the $17 offering level, and closed Friday at $16.50.
Why do the BEA honchos think their firm is worth $21 a share? or are they just pretending to think so? We'll get to this tomorrow. Feel free to post your comments and tell me I'm an idiot if I'm getting any of this wrong. It's the only way I'll learn.
BEA, a company founded in 1995 and headquartered in San Jose, Calif., sells software: largely to financial-services companies, although its products have other outlets as well.
Oracle wants to buy it. Not the software, the company. But BEA's management has allowed the deadline to lapse on Oracle's bid, ticking off Icahn, who doesn't think the stock is worth as much under current management as Oracle is offering. This is a classic set-up for a proxy fight, and Icahn is a grizzled veteran of the game.
This is also a good excuse for us to work through some terminology. Though sometimes used loosely, the words "takeover" and "merger" have in their strict use quite distinct meanings. A merger is the mutual decision by two companies to combine -- it involves a vote by both sets of shareholders. A takeover, on the other hand, is the buy-up of the shares of one company in the market by another.
A takeover can be either friendly or hostile. In the case of a hostile takeover, there are various defenses an incumbent board might put in place to limit a buyers' ability to attain a controlling share of the compnay equity -- we'll likely have a chance to discuss them if I continue writing this blog for any length of time.
But of course the chief reason for an acquirer to try to work within the corporate structure of its target and accomplish a merger is that going the takeover route can be tricky and costly if the target resists effectively.
What Oracle proposed was a merger. It's offering $17 a share, but the management of BEA has taken the position that this isn't enough. It wants a minimum of $21.
That seems quite a brassy demand, since BEA's stock was trading at about $14 in early October. It rose above $18 briefly after Oracle made this offer. In effect, investors bid it up to that level in the expectation that the $17 offer was just an opener, and that Oracle would sweeten it a bit. But as management's hostility to a deal became clear, the price sank below the $17 offering level, and closed Friday at $16.50.
Why do the BEA honchos think their firm is worth $21 a share? or are they just pretending to think so? We'll get to this tomorrow. Feel free to post your comments and tell me I'm an idiot if I'm getting any of this wrong. It's the only way I'll learn.
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