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Focus Media Holding Ltd. Message Board

  • fmcnvisn fmcnvisn Jan 3, 2013 9:18 AM Flag

    Why share price not at or close to 27.5 now?

    given the privatisation deal is almost certain?

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    • The spread is there because everyone with a brain knows this is a fraud. Just like Harbin, the company may have lucked out with their real estate holding that may be worth the $27.50 price. Then again, this could be a way for the insiders to dump their shares. The discount reflects the fact that the company has bogus earnings and that the deal shouldn't go through based upon that.

    • CADC was a CMLBO that failed. As was said, you have to be careful. This one seems to have some quality players involved, so, IMHO at least, its prospects seem pretty good. BTW, these always take longer than you expect them to to close. Often, considerably longer.

    • The market is pricing in a few risks to the deal:

      1. The shareholders will not approve the deal
      2. There will be a problem with the deal's financing
      3. A material adverse event will arise. In the case of FMCN, that most talked about potential MAE is the financial statements are not fairly presented in accordance with GAAP.
      4. The company is a Chinese based company, and carries the baggage of the many articles that have been written about privatization of Chinese companies that previously went public on the U.S. market.

      Additionally, you have the time value of money from today's date until the deal is closed. After weighing all of the above risks and the potentially reward of owning FMCN, I am long. However, each investor needs to consider all of the above in determining what position, if any, they will take in FMCN.

      • 1 Reply to gdx100
      • I thought the shareholders had already approved the deal. I'm short via puts but the odds are this deal will close. It seems to me that none of the take private deals has failed. HRBN, FSIN, are the only ones that I know were brought private. Companies that had fraud allegations but no take private offers went bust, CAGC, CCME, SINO and Longtop. This deal is big enough and the political connections high enough that even if fraud is the case inertia might see it through. Put options should be extremely cheap so I'll add more out of morbid curiosity and masochism when the deal gets closer.