Also fro the Yahoo board, good fairly balanced analysis:
Requisite Uncertainty 16-Apr-08 09:43 pm
I know some of you have attempted to contact NSOL and IA (which, for you conspiracy theorists, has always been hyphenated). This is a well meaning attempt at gathering information. However, the parties involved cannot and will not provide you with any information beyond confirmation that talks are underway.
What I offer now will be a few points to consider.
To begin with, the notion that this is all a scam is laughable. It has gone far past the point that anyone might imagine they could get away with this without facing prosecution. Moreover, all this talk about insiders profiting is without substance. No insiders have sold. In fact, the last four purchases by insiders have been followed by a decline in the stock price.
Okay, for those of you who are wondering, why does IA want to buy NSOL? The motive is likely either: diversification, synergies, empire building, or vertical integration. My vote is for diversification.
We know that NSOL was in need of capital and had been in talks last year with Bear Stearns on financing. When the talks broke off, I thought it was NSOL that had fouled up. Now, I am not so certain. But, company still needed financing and, while pleased to see IA come into the picture, I do not believe in such coincidences. My guess, and it is only a guess, is that NSOL shopped itself. And, given the manner in which the board quickly accepted the offer and engaged in open due diligence gives me more reason to believe this was the case. It also allows IA to complete an effective valuation of the firm before finalizing the deal.
For those of you who might think (as I once did) that somehow IA might be manipulating the process by bidding and buying the stock low, they are not. If they bought as little as 5% of NSOL stock they would have to file a Schedule 13d with the SEC and they have not.
IA has engaged the services of some excellent middlemen: Klehr, Harrison, Harvey et al; Georgeson, and Computershare (and yes, I know about the relationship between the latter two).
Most recently, there is some question about the legislation in Kentucky and whether this helps NSOL. What is most notable is that NSOL gave the SEC notice they would not file their required 10k, which was due at the beginning of April. This is a comprehensive report that is filed annually; but, can be delayed up to 90 days. Here is where some simple math and a bit of knowledge about M&A are handy. The time span for completion of the average merger or acquisition is 6-9 months. If we started the clock in December, 2007 when the NSOL/IA deal was first proposed, we can see that it might take until September. However, if we expect the delay in the filing of the 10k was to avoid a lot of work amidst the negotiations that were expected to close before the extension expired, then one can intuit the deal will be done by 6.30.08.
Okay, the bad part. What would cause the deal to fall through? Though not exhaustive, the most likely scenarios are, in order: 1) NSOL valuation is not what IA expected; 2) IA financing stalled and given the current state of investment banking, not a far fetched idea. Except that the deals having problems are over $500 Million and this one is $110 Million; 3) NSOL has decided to ask for more money and IA has balked.
If you want further evidence that these things are a bit weird, take a look at the Yahoo and Microsoft dance; or Countrywide and BOA; or Bear Stearns and JP Morgan Chase. Do you know why each deal makes sense? Probably not for the reasons they do to the insiders. That is what the folks in the field of strategy call requisite uncertainty. The deal will happen.
End of message.
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