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I know I keep coming back to this situation, but part of the theme of my writing is the notion that common stockholders be respected and protected.

Tuesday we had more ridiculousness from the Bankrate (NYSE:RATE) "going private" transaction:

Apax Partners Successfully Completes Tender Offer for Shares of Bankrate, Inc.

NEW YORK, Aug. 25 /PRNewswire/ -- BEN Merger Sub, Inc. and BEN Holdings, Inc., corporations whollyowned by funds advised by Apax Partners and formed for the purpose of acquiring Bankrate, Inc., today announced the successful completion of the cash tender offer for all of the outstanding shares of common stock of Bankrate at a purchase price of $28.50 per share in cash.

Then they tally up the shares tendered (sold to them by existing shareholders):

The depositary for the tender offer advised that, as of the expiration time, 5,397,131 Bankrate shares had been validly tendered and not validly withdrawn (including 635,671 shares tendered by notices of guaranteed delivery). These shares represent approximately 28% of the outstanding shares of Bankrate. All shares validly tendered and not validly withdrawn in the tender offer have been accepted for payment by BEN Merger Sub. An additional 4,571,476 shares, approximately 24% of the outstanding shares of Bankrate, are owned by directors and senior managers of Bankrate subject to Non-Tender and Support Agreements under which BEN Merger Sub, as of the acceptance time of the offer, has an irrevocable proxy to vote, giving BEN Merger Sub voting control of approximately 52% of the outstanding shares of Bankrate.

Those share amounts come in WAY BELOW the company's ACTUAL shares outstanding, of a little over 18 million. So how does Apex conclude that it's a done deal? Because, as per the original details of this absurd merger agreement, if not enough shareholders agreed to sell, then Bankrate would issue more shares to the acquiring entity, giving them effective control in a "top-up" provision. Keep in mind this is completely legal.

From the 7/22/09 merger filing:

From Tuesday's release -- thanks "Florida Law!"

BEN Merger Sub has also advised Bankrate that it has exercised its "top-up" option granted under the merger agreement pursuant to which Bankrate has agreed to issue shares to BEN Merger Sub in an amount sufficient to achieve at least 80% ownership plus one share and permit the completion of a "short-form" merger under applicable Florida law, without a vote of the shareholders of Bankrate. Accordingly, after providing 30 days' notice to shareholders as required by Florida law, BEN Merger Sub intends to acquire the remaining shares of Bankrate common stock through a short-form merger in which all remaining Bankrate shareholders who did not tender their shares in the tender offer will receive the same $28.50 per share in cash, without interest and less any applicable withholding taxes, paid to shareholders tendering in the tender offer.

This deal will go through. But one would hope that efforts like that from shareholder Philippe Laffont would help equity investors in the long run, as it highlights some pretty despicable treatment of stockholders.

Disclosure - no position

Source: Bankrate Acquisition: Shareholders Don't Want to Sell? Then We'll Dilute Their Holdings!