Further reading

Elsewhere on Friday,

- How likely is an imminent eurozone default?

- More eurozone crisis thoughts.

- Hangover theory and morality plays.

- Bailout data point of the day: Morgan Stanley edition....

Snap news

Breaking pre-market news on Friday,

- Rio Tinto extends Channar joint venture with Sinosteel; forms new JV with Chinalco for Chinese exploration — statement and statement....

Cross-border M&A and EM flows

Following this morning’s $4.1bn acquisition of Russia’s Wimm-Bill-Dann by Pepsi, Reuters updates the year’s international M&A numbers:

- Pepsi’s $4.1 billion...

A peek into Alberto Culver’s proposed merger…

VO5 shampooWhen Unilever (UN) announced on Sept. 27 that it planned to buy Alberto Culver (ACV) for $3.7 billion cash (which would pay investors $37.50 per share), CEO Paul Polman opined that the acquisition provides strategic organic growth opportunities for the Netherlands-based company and its various divisions. Hopefully that’s true, but the deal will yield a pretty nice payout for the executive officers and directors of Alberto Culver, too.

According to the recent merger proxy, the biggest winners will be Executive Chairman Carol Bernick (the daughter of Alberto Culver’s founder, Leonard Lavin) and President/CEO V. James Marino. They will receive $29.5 million and $14.7 million, respectively, just for their stock options. They’ll also get $97,500 and nearly $2.2 million for their respective RSUs, and a few hundred thousand more for their performance units.

The execs will also get an award under the Management Incentive Plan that can’t be quantified until there is a closing date for the merger and the company’s performance through that date has been established. And Bernick will get nearly $4.72 million for severance and benefit costs, while Marino will get almost $6.68 million for those categories. Bernick gets an extra benefit, though. The filing states that she will

“…receive $200,000 per year for 15 years upon termination of her employment, a split dollar life insurance agreement and a lease for approximately 1,200 square feet of office space in Alberto Culver’s headquarters, will continue in effect following the merger.”

The negotiations seem more complicated than some deals that we’ve seen, partly because they’ve also involved members of founder Lavin’s family and representatives acting on the family’s behalf. For those interested in the background of the deal, there’s a supplemental disclosure filed Nov. 29 that provides more detail than the earlier version of events contained in the Oct. 15 preliminary proxy.

But we couldn’t help but notice a slightly different account of how the deal got started in the first place. If you go by this Schedule 14A, filed Sept. 27, in answer to the questions “How did this deal come about? Who approached whom?”, Alberto Culver’s answer is:

“We knew from discussions with numerous bankers and investment advisors that Unilever had a commitment to growing their personal care business and their infrastructure, geographic footprint and resources could provide accelerated growth for our brands. Through our banker we approached Unilever….”

That’s not the same answer, as we read it, in the Nov. 29 filing, which recounts the acquisition negotiations starting as follows:

“On or about April 28, 2010, an investment banker purporting to represent another company involved in our industry, which we refer to as Company A, contacted Carol Bernick, the executive chairman of our board of directors….  the investment banker confirmed that the purpose of the meeting would be to discuss a possible acquisition of the Company.”

But at this point, any discrepancies may not matter. The supplemental disclosures appear to have satisfied the shareholders who sued Alberto Culver for an injunction and damages after the deal was announced. They’ve reached a preliminary settlement with the company that is waiting for court approval. The final hurdle will be getting the consent of shareholders, who are scheduled to vote on the proposed merger December 17.


See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.

Google and Groupon: Smart or stupid?

With its talks to buy the fast-growing US electronic coupon company Groupon for as much as $6bn, Google has analysts wondering whether it’s being very smart or very stupid....

Further reading

Elsewhere on Thursday,

- The biggest CEO screw-ups of 2010. – Reign of (economists’) error.

- The junk-bond time bomb.

- China’s warning signs.

- The rough...

Baldor directors did some pre-Thankgsgiving shopping…

Yesterday, ABB announced that it was acquiring Baldor Electric (BEZ). Although six separate law firms have already announced that they’re investigating the pending deal, the news sent Baldor stock up over 40%.

As we do with most deals, we like to look through the target company’s previous filings to see if there were any interesting patterns. And we found two interesting Form 4s filed by Baldor directors. This one filed by director Robert J. Messey shows that on the day before Thanksgiving, Messey essentially doubled his stake in Baldor to 65,508 shares. Messey, the former CFO of Arch Coal (ACI) bought the shares at prices ranging from $22.31 to $45.15. It’s that last tranche of 5,280 shares that really sticks out since the shares were marginally underwater before the news was announced and had been exercisable since May 2007. The Form 4 was filed after the market closed on Monday. ABB has agreed to purchase Baldor for $63.50 a share, so even buying shares at $45.15, it’s quite a deal.

Messey wasn’t the only director (and oddly enough, former CFO) who went bargain shopping days before the deal was announced. That same day, Director Robert Proost, the former CFO of AG Edwards, filed this Form 4 that shows that he bought nearly 35,000 shares, also on the day before Thanksgiving, increasing his holdings from just over 20,000 shares to nearly 55,000 shares. Like Messey, one of the tranches exercised by Proost was marginally underwater at the time of the exercise. But that changed pretty quickly once the deal was announced on Tuesday morning.

Judging by the other Form 4s filed by Mssrs. Messey and Proost, it’s a pretty mild understatement to say that the purchases seem to be out of character. But given when the Form 4s were filed, there’s not all that much that an investor who had been paying attention to these particular filings could have gleaned. So we’ll just have to chalk this up to some pre-Thanksgiving bargain shopping, sans the crowds waiting in line at 3 a.m.

Image source: BlackFriday.com


See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.

Snap news

Breaking pre-market news on Tuesday,

- ABB to buy Baldor Electrical for $3.1bn — statement.

- Remy Cointreau reports large drop in half year profits; takes €45m hit on...

Betfair finds the going heavy

If you thought Betfair was a thoroughbred IPO think again.

After flying out of the traps the internet betting exchange is finding the going a bit heavy. On Monday, Betfair dipped...

Snap news

Breaking pre-market news on Monday,

- Bank of Ireland to seek €2.2bn from shareholders, capital markets, internal capital management initiatives — statement.

- Irish Life &...

Bank of Ireland vows to fight on

Statement released late on Sunday night, in which Ireland’s (ahem) strongest lender says it will try to raise €2.2bn from existing shareholders, internal capital management and in the markets....

Snap news

Breaking pre-market news on Friday,

- KKR-led group buys Del Monte for around $4bn excluding debt — report

- Genzyme CEO says he’s open to linking performance of...

Autonomy decrypted

Autonomy has for the past several months been working on a specific acquisition. This work is ongoing. Recent developments within these talks have given rise to an additional...

Snap news

Breaking pre-market news on Thursday,

- Hana acquires 51 per cent of Korea Exchange Bank for $4.1bn — Reuters

- Simon Property asks Capital Shopping Centres to delay Trafford Centre deal;...

Deal or no deal?

So that would be no deal, Dr Lynch?

Press release issued by Autonomy late on Wednesday afternoon:

Autonomy has for the past several months been working on a specific acquisition....

Snap news

Breaking pre-market news on Wednesday,

- Capital Shopping Centres to buy Trafford Centre for £1.6bn — statement.

- Tianjin Xinmao confirms $1.3bn bid for Draka; offer...

European banking binary bet

European banking stocks are under pressure again on Tuesday morning as investors continue to fret about the eurozone sovereign debt crisis:

So what is being priced in?...