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Ebix Inc. Message Board

  • stuart60611 stuart60611 May 7, 2013 12:11 PM Flag

    Raina May Not Have Enough Muscle To Get This Sale Closed

    In addition to he and the Board being personally targeted for litigation contending that they breached their fiduciary duties to shareholders and investor Shaw filing an injunctive action in Delaware against the company to stop the sale, I have serious doubts that Raina independently and without consideration of these things can get this sale closed. He and his foundation only control 19% of the common stock. There are a lot of other institut6ional and retail investors who can't be happy about the sales price and will likely vote against it. With only 19%, I don't think Raina can push this this sale through even if litigation does not prevent it or even if no higher offers are made.


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    • like a lot of things about the way this stock trades it makes no sense-solid offer at 20-most including a bunch of lawyers think the deal is too low - and the stock trades below 20

    • all he needs is 51% voting yes, right? Which is 40% of the shares he does not own. You think 60% of the investor base will vote no? And given the polyglot nature of ebix (it has all the varied medical exposure, all the international exposure, in addition to the US insurance exchanges- that will not be a good fit for some "likely" bidders) I think the odds that another bidder emerges are likewise not high

      a huge chunk of shorts have likely exited their positions, and we will know that before the go-shop period has ended. Assuming shorts are "smart" money then, looking at the drop in short interest will give a gauge of how likely the "street" thinks a "no" vote is, because for sure price will drop if shareholders refuse the buyout, even with its very low 7.5% premium over price at the time of announcement

      some say the surge over 20 day of announcement meant street things another bid will come in, but that just have been a rush for the door by panicky shorts

      and realistically, how high do you expect a buyout for? 20-30% premium would be reasonable and 20% premium means sale price of 22, a gain of $2. The share price could drop by that much upon a "no" vote.

      my investment thesis is therefore that the deal goes through. I've been selling long-dated puts to maximize my return based on that thesis

    • He got Rennes supporting him. Raina seems smart. he did a stock deal with Adam when ebix was at 30. Now he is taking it private. Who knows what EBIX is worth better than Raina? Raina/Rennes will own 44% of the new co

      • 1 Reply to value_speculator
      • If Raina doesn't see fit to sell at $20, then he thinks it is a bargain at $20. He'll have to hold his interest in the company until he sells to either GS or someone else or when it has a new IPO. It could be years without his ability to sell. GS is loading it up with debt in the financing of the takeover. It could be hard to grow the company with probably non-investment grade bonds/loans on its back sucking up the cashflow. So I don't think that this deal is even good for Raina.

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