The Curious Case Of The Blyth Buyout
Nov 18 2013, 07:16 | about: BTH, includes: CVSL BOOKMARK / READ LATER
Disclosure: I am long BTH. (More...)
A few weeks ago I wrote an article following the revelation that CVSL (OTCBB: OTCQB:CVSL) had made a tender off for BTH (NYSE: BTH) at 16.75 per share. Two questions posed in the article were related to the size of the then existing short position and how aggressively BTH management would respond. As of last week, we now have both answers, but also many new questions.
Last Monday after the close of trading the new short interest report was published and it was still near record highs at 90.63% of the public float according to ShortSqueeze.com. On Friday morning, Blyth's BOD announced that it had unanimously rejected CVSL's proposed acquisition due to a laundry list of issues it had with the proposed consideration. This was a surprise to no one, as the company itself had been making open market purchases of BTH shares at prices that were much higher than the proposed $16.75. What is kind of surprising is the degree to which the market is discounting the likelihood of some kind of deal ultimately occurring. While I certainly do not have a crystal ball, I do have Google and SEC Edgar access, which allows me to see how many deals John Rochon has pulled off in the past and how they often start just like this one. I can also see how much he has ramped up the deal making machine since starting CVSL - the deals completed in the last 12 months are nothing short of remarkable and the machine is currently running at about two new LOIs per month. While Blyth's recent earnings release shows the company may be turning a corner that will allow it to resume its growth trajectory, CVSL just announced a quarterly revenue figure of $23.75 million, a $23.5 million increase in revenue year over year. Obviously CVSL as a direct marketing company/consolidator did not exist in Q3 of last year (and all of these companies they have acquired did) so its not like a de novo situation; but the point not to miss is that John Rochon and CVSL have made what seemed like (when said) some pretty grand statements about what they intended to do with CVSL. They then proceeded to do exactly what they said they intended to do, including going from zero to a $100 million+ run rate in one year, with the currently owned assets (ie not including deals in process) tracking at a $140m annual run rate.
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