I assume most readers have not taken the trouble to watch the webcast of the above mentioned meeting. It was a bit of a sad display with dissatisfied shareholders asking questions, mainly to Mr. Meysman, the chairman of the supervisory board. There were however a couple of interesting pieces of information. One is that CE internally had given itself a valuation of EUR 8.50 on a stand alone basis, which gave justification to calling the Staples offer a fair value. Another interesting fact was that Mr. Meysman mentioned that it had been impossible to get enough support for the Lyreco deal, which made it pointless to put this deal to a shareholders vote. I suspect management still doesn't like the Staples deal at all, but just had no option other than going along with it.
In the webcast the approval from the European Commission was mentioned, but also using the Staples press release as the source, like all other press did today. I still find it very strange that we have not seen a press release from the European Commission about the approval. (end of post)
woensdag 18 juni 2008
CE Extraordinary General Meeting of Shareholders
Staples Obtains Clearance in the European Union
In this news release from Staples they announced that clearance has been obtained from the European Commission with respect to the outstanding offer for Corporate Express. It is strange that it has not yet been announced by the European Commission themselves, but I am sure we can expect their news release today. This final regulatory hurdle means it is now all up to the shareholders of CE, and the acquisition is almost a fact. With an expected settlement date of July 9th, and a current share price of 9.21, there is only 0.4% to be earned for risk arbitrage players, which is equal to about 6.0% on an annualized basis. (end of post)
Read more...dinsdag 17 juni 2008
Where is the European clearance?
Today was the day where we expected to receive clearance from the European Union for the acquisition of CE. As Staples mentioned in the news release in the beginning of June when they increased the offer to EUR 9.15 per share:
"Staples is confident that clearance in the European Union will be granted on or before 17 June 2008."
Unless employees of the European Commission are working overtime, no clearance will be received today anymore. Let's hope it is just a time glitch and the clearance will reach us tomorrow, the day of the extraordinary shareholders meeting. If it doesn't, an explanation should be offered to us, either by Staples or by the European Commission. (end of post). Read more...
Fair value settlement CE options
While we are reaching the last stages of the acquisition of CE by Staples, speculators with Euronext listed options, may want to check what will happen with their positions, when they don't liquidate them before the end of the acceptance period. In this case positions will be settled with the so called fair value method, which is explained in this article. Information with respect to volatility and dividend assumptions can be found here. Readers should not be intimidated by the option valuation model that is applied by Euronext. A standard Black & Scholes model, adjusted for dividend, will give a fairly correct estimate of the fair value. It will also show that, after transaction costs, there are not many opportunities left to take advantage of this acquisition. (end of post)
Read more...donderdag 12 juni 2008
Corporate Express publishes Position Statement on Staples offer
This morning CE released a press release announcing the publication of the position statement on Staples' offer to buy the company. The 24 page statement does not offer many new insights, and repeats a lot of known facts. Interestingly the company is taking a neutral stance in respect of the offer for the preference shares. The most interesting new information in the statement was the following:
Furthermore, the two members of the Executive Board will receive a special performance bonus in view of their exceptional efforts over the last period. Mr Ventress will receive an amount equal to €600,000 (before taxes), and Mr Waller will receive an amount of €250,000 (before taxes).This will now effectively be a cost to Staples, but I wonder who made the decision to grant these special performance bonuses. (end of post) Read more...
woensdag 11 juni 2008
Additional information from the CE press conference
Peter Ventres confirmed in the Q&A session of the press conference that a break up fee of EUR 30 million will have to be paid to Lyreco. Mr. Ventress also mentioned that they decided to agree with the deal only last night when Staples agreed to the higher price of EUR 9.25 when they purchased shares outside the regular market. Mr. Ventress refused to disclose who the sellers of the 1.1% of shares were, and stated that this was a question for Staples. Mr. Ventres is very happy and excited about his offer to the new position of president of Staples International, reporting directly to Ron Sargent. (end of post)
Read more...How was a higher price possible?
Many people were under the impression that Staples would not be in a position anymore to increase the offer price further, after they increased the price from EUR 8.00 to EUR 9.15 a week ago. The Dutch Decree on Public Takeover Bids (Besluit openbare biedingen Wft) gives a detailed overview of the process, and both parties have referred to it in their communications with the public. Article 15 of this decree states that the offer price can be increased once, and Staples used that opportunity already. In the news release from CE we can read that article 19 offered another opportunity to increase the price:Prior to finalisation of the agreement with Corporate Express, Staples Acquisition BV purchased 2,085,403 Ordinary Shares, representing approximately 1.1 percent of Corporate Express’ outstanding ordinary share capital, for a price of € 9.25 per Ordinary Share in a transaction other than a regular on market transaction. Therefore, in accordance with Article 19 of the Dutch Decree on Public Takeover Bids (Besluit openbare biedingen Wft), if the Offer is declared unconditional, Staples Acquisition BV will be required to pay (i) € 9.25 per Ordinary Share validly tendered into the Offer (or defectively tendered, provided such defect is waived by Staples Acquisition BV) and (ii) € 9.25 per ADS validly tendered into the Offer (or defectively tendered, provided such defect is waived by Staples Acquisition BV).
The number of shares purchased by Staples in this transaction comes very close to the amount of share options, issued by CE, that are in-the-money. This could of course be a coincidence, and assuming that Staples agreed to buy the exercised employee options would only be speculation.
