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Krispy Kreme Doughnuts, Inc. Message Board

  • fisk007 fisk007 Jan 18, 2013 11:20 AM Flag

    Increase Bid

    Quoting recent article -

    Corporate Raiders Beware: A Short History of the “Poison Pill” Takeover Defense:

    "If nothing else, they force hostile takeover artists to negotiate with boards, and put pressure on potential buyers to increase their bids. One 2005 study by FactSet found that companies using poison pills were able to raise their price tag 24% higher than companies without such plans. In the case of Peoplesoft, the takeover target only agreed to rescind its poison pill provisions and allow itself to be bought by Oracle after the larger company more than doubled its bid from an initial $5.1 billion to $10.3 billion."

    - - - - - - - - - - -

    "Companies using poison pills were able to raise their price tag 24% higher than companies without such plans"

    This "poison pill" actually is more than likely confirmation that there is serious interest in KKD by potential acquirers.

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    • Look how this Sonus Netwoks filing about a "poison pill" provision (stockholders rights") is viewed internally.

      This is from a recent Sonus10-q filing:

      "In addition, we adopted a limited duration stockholder rights plan on June 26, 2008, which was amended on June 10, 2011 to extend the expiration date of such plan until June 26, 2013. The rights are not intended to prevent a takeover, and we believe these rights will help us in our negotiations with any potential acquirers."

      As you can see "poison pills" are used as negotiation leverage in any acquisition talks.

      Think people should keep that in mind here.

    • “If you want to buy the company, you'll have to fund the acquisition with cash or stock, not the internal resources of Krispy Kreme, such as its cash position and extant tax shields,” Plath said.

      That is most likely the reason for the recently announced "Tax Asset Protection" Plan.

      KKD wanted to make sure any POTENTIAL acquirers do not get cute with an offer.

      Either pay what the company is worth...or stay away.

    • Can't help but think there may be multiple parties who are quite interested in KKD.

      Would have to think that there has been substantial interest since the late November earnings report.

      The "tax asset protection" plan was terrific and seemingly a possible signal that any interested parties that are bidding / negotiating MUST take into account the extremely favorable tax status KKD enjoys...

      ...As well as a possible signal that if they continue to go it alone - capital flow...and earnings should be very strong for the coming years as a result of that favorable tax status.

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