Seeking Alpha

Panta Capital's  Instablog

Panta Capital
Send Message
Panta Capital Ltd is an investment consulting firm for retail & institutional investors, specializing in international, liquid event driven investing with a strong focus on European and North-American merger arbitrage and equity special situations. Panta Capital activities evolve around... More
My company:
Panta Capital Ltd
My blog:
pantacapital.com
View Panta Capital's Instablogs on:
  • REpower Systems AG: Suzlon at Play?
    We have looked at REpower Systems AG, the German wind power company, which is currently 91% owned by Suzlon Energy, the Indian wind power company. We have analyzed the trading opportunities around this special situation with respect to timing, upside/downside and dynamics.

    For further discussion and conclusion, please access the Panta Client Section at pantacapital.com.
    Jan 06 8:46 AM | Link | Comment!
  • Minerva plc: Merger arbitrage situation for this London property bid
    We have analyzed the Minerva plc situation, which on 17-Nov-09 received an unsolicited 50p or £84.5m cash offer from Kifin Limited, Minerva's 29.9% shareholder. Given the developments for Minerva in the last 12 months, we believe the offer is highly opportunistic. We have looked at the bid history, the upside and possible drawdown for the Minerva investment case, and believe Minerva's current share price represents a buying opportunity for this smaller capitalized company, which might be off the radar for most special situation investors. For full analysis of the situation, please access the Panta Client Section.
    Tags: minerva plc
    Nov 23 1:12 PM | Link | Comment!
  • Tandberg: Open Letter to Cisco Management
     London/Zurich, 06 November 2009

     

    RE: Open letter to Cisco on the proposed acquisition of Tandberg

     

    Dear Mr. Chambers, Dear Mr. Hooper,

     

    Since making a public offer to shareholders you have also made comments to the press regarding the value of your offer and on Cisco’s broader M&A principles. As we near the end of your offer period and on behalf of Tandberg shareholders, we feel it necessary to address certain points on the value of your offer with you directly.

     

    While we fully agree with your statements that each corporate entity should respect the broader principles of prudence and financial fairness in pursuing an active M&A strategy, we also believe that in this specific case your offer does not reflect the true value of Tandberg’s business prospects nor does your offer reflect the premium to market value that you claim it does:

     

    · You have noted that Cisco’s offer represents a 38.3% premium to the closing share price on July 15th (one day prior to major media reports of a possible transaction but months before your actual offer). We fail to understand why you pick July 15th as a reference date. Tandberg has been mentioned as a take-over candidate on various other dates in the last 18 months with Silver Lake Partners being named on a number of occasions as an interested party. Your argumentation that your offer represents a 38.3% premium to Tandberg’s July 15th share price is also a misleading one. Put into perspective, between the 15th of July and the 1st of October, the Oslo Benchmark Index appreciated 27% in $ terms while Tandberg’s main competitor Polycom also saw its shares rise 23% neither of which are a reflection of your offer.

     

    · We also fail to see any premium reflected in the NOK153.5 offer compared to:

    o Tandberg’s historical trading valuation: NOK153.50 represents a mere 5% premium over Tandberg’s historical forward 18.6 PER valuation.

    o Peer valuation: NOK 153.5 translates into 19.2x 2010 consensus EPS, which hardly shows an acquisition premium to Tandberg’s main competitor Polycom’s trading valuation at 18.5x 2010 consensus EPS.

    o Operational Performance: Since the offer was made, Tandberg has posted Q3 results beating top-line consensus estimates by 8% and operational earnings consensus by 4%.

     

    · While Tandberg’s share price has appreciated in concert with fervent bid speculation, Tandberg’s share price appreciation can be explained by its operational outperformance: since the economic downturn started at the end of 2007, 2009 consensus EPS estimates for Tandberg have fallen only ~ 9%. This compares to revisions in the S&P Info Tech sector and Polycom whose 2009 consensus EPS estimates were slashed by ~ 30% and ~ 45% respectively. An offer at NOK 153.5, which values Tandberg in-line with Polycom, can in our view not be justified as an attractive offer.

     

    · Tandberg’s long serving board chairman Jan Chr. Opsahl’s believes that as a standalone company it could take Tandberg 10-15 years to move from a revenue level of USD 1bn to USD 10bn or about 5 years to achieve that same USD 10bn if it were part of Cisco. We see this as evidence to reflect a further mismatch between the offer price and the future growth profile.

     

    Given your conviction that video conferencing will become the core of the USD 34 billion dollar collaboration market, we believe the NOK 153.5 per share offer undervalues the significant growth profile of Tandberg, the market leader of the video conferencing infrastructure market.

     

    We believe that a higher, more appropriate price for the acquisition of Tandberg, taking into account its growth profile and the substantial scope for sales and cost synergies, is not in conflict with Cisco’s respect of the principles of prudence and financial fairness.

     

    Respectfully,

                                                                   

    Panta Capital                                                                           

    Disclosure: Long Tandberg

    Tags: TADBF, CSCO
    Nov 06 4:15 AM | Link | Comment!
Full index of posts »
Latest Followers
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.