Neither of the two recent Seeking Alpha articles mention the fact the buyout can be terminated if more than 15% of owners seek appraisal. My read on this is that the buyers realize their bid is on the cheap side but do not want to pay more. Any other ideas on this?
They got fairness opinions from investment bankers that generally said $3 was high although there were arguments for higher and much lower. I wouldn't hold out much hope for a higher price but stranger things have happened.
This is a standard merger out (although the % differs from deal to deal). TWGP is controlled by arbs now, they want $3, nothing more or less. So they won't be seeking appraisal. Neither will institutional holders (assuming any are left). Besides, the appraisal process is almost always not worth the $ you have to expend to go through it (hiring lawyers, etc.) - small hedge funds sometimes try this route, but it almost never pays off.
A mistake on the part of the character that thinks this is such a great deal, and one of the reasons why I think he is under-estimating the potential cost of being wrong. Merkle has enough reasons to avoid this POS, all strictly fundamental, and his not mentioning the 15% limit probably speaks more to his lack of experience with takeouts like this one. You are right on, and as I posted quite some time ago the reason for the 15% limitation is quite transparent (although some ignoramus tried to make the claim that the Bermuda Companies Act imposes this limitation -- it does not). I would not say that the buyers are necessarily getting the company for much less than it is really worth, but I do think that the Bermuda Court will listen more favorably to dissenting shareholders' arguments that they should get something between the $3 and the latest estimate of either book value or tangible book.
Merkel's "analysis" (if you can call it that, it seems like mere unfounded speculation to me) is 100% wrong - I commented on his SA article showing why it is wrong. But I hope both you and him short TWGP so I can get some cheap shares (sorry if you lose $ in the process, bro).
I knew about the 15% provision on appraisal rights, and there are a number of other ways to break the deal also. It's difficult to be comprehensive and compelling at the same time.
Appraisal rights are a roll of the dice. You can get more or less. Most of the TWGP at present is probably held by arbs who don't get the risk here. Most of them will be happy with their $3, should they get it.
As such, it will be difficult to get 15% filing for appraisal rights. That said, ACP et al. have had a look through the internal books of TWGP, so if the deal *did* complete, filing for appraisal rights might be a good idea, because the odds of TWGP being worth more than $3 is subjectively higher.
But just because you file for appraisal rights does not mean you are done. Someone clever has to make the case to the judge as to what TWGP is worth. ACP et al. have a lot of money to throw at such a case. Unless someone big decides to file for appraisal rights, hiring the actuaries, etc., you likely won't get more than $3, and you might get less.
So as I always say, be wary. Manage risk, and you might get reward.