BREAKING: PBY Board of Directors determines that 18.50 is in fact a larger number than 17.00
This is great.
Bridgestone might match it but I doubt they go over. And its hard to see Carl going higher.
But, this is exactly what I wanted....a bidding war.
If PBY accepts $18.25 and calls it superior, Im going to raise cane.
Nothing less than a matching offer should be accepted.
The buyout was only increased $4.5 million. it was $35 million from way back when after Carl quit bidding at $13.50 and awarded the deal at $15.
Its only 8.3 cents extra.
I can see why both sides did what they did. But 8.3 cents shouldn't dissuade Carl from bidding again.
If anything, it encourages him to put his max bid on the table now or else they will up the buyout again & again.
Carl tried to sneakily steal away the first movers advantage but PBY didn't let him.
I mean, sell at $48, buy at $42 + the dividend seems to be the way to go.
But, its also a position I plan to hold for many years.
And its not quite large enough to where I feel comfortable trading a portion of it.
I just know when it last fell to $42, I felt like they overpaid for the acquisition.
Now, I feel the market overcorrected for the small interest rate increase.
I guess I need to build up my position to where I can trade around a small part of it from time to time.
Right now, its not large enough to risk selling.
If he wins, he gets the store, if Bridgestone matches his offer, he gets another $6+ million from his stake.
The only reason not to bid is if he doesn't want them or is afraid of being stuck with them.
However, no matter how much he bids, they will give bridgestone the chance to match it. So it seems unlikely he will get it for 10 cents more.
And if he tries to go the 25-50 cent a time route, PBY is going to increase their walkaway fee a little bit each time.
So if his max was indeed $18.10, he needs to go ahead & bid $18.10 less the increase in the buyout fee which would be $18.017 per share. Then bridgestone can match it or take their $39 million & walk away.
Or better yet, offer $18.50 & hopefully blow them out of the water.
Carls attempted ratchet offer was clever but it backfired on him.
PBY seems to be telling him to make his best bid but that no matter what, they will allow bridgestone to match it. Or perhaps beat it by a nominal amount. 5-10 cents even.
I spent 12 years at car auctions bidding for cars. Sometimes I started a car high to try and blow other bidders out of the water. Other times, others started it low and I just kept bidding. I tried to value the cars beforehand and I didn't usually go over my values unless say i missed on 5-6 in a row and I didnt want to go home with nothing in which case i might go over $100-300.
in this case,everyone had an equal playing field until carl stopped bidding at 13.50. Perhaps because he thought he might be getting played.
And that happens. now he knows but he lost the first bidder advantage.
But maybe Jan & Feb will be colder. I think its going to cool down next week in my area. It was in the 70s today.
At current prices,I don't think it matters.
RCKY is a sitting duck at current prices for a takeover.
So the stock either goes up or the company gets sold. Or better yet, both.
Im not & never was thrilled with creative rec or for ur sole or whatever that was.
So I don't think we can have any downside surprises from them.
The other thing is, both bidders have very deep pockets and could probably make a deal work at even $20.
Bridgestone is in the drivers seat though because if they let Carl have it, they walk away with $39.5 million of PBYs cash.
I saw a quote late last night where Carl was sort of saying he was done. Said merry Christmas to shareholders from him for getting them more.
But he is still allowed to make a higher offer. We just don't know if he will.
He wanted to jump over the first bidders advantage and pby didn't really let him.
A 10 cent increment isn't that much better. If he wanted to bid $18.10, he could have. Now, there is an extra $4.5 million buyout fee which is 8.3 cents per share.
I hope he bids again. Just because Id hate to sell for less than he was willing to pay.
At the same time, you have to wonder why the board didn't make bridgestone bid $18.10.
Worst case is $17.00, a 2.91% implosion.
But, I still think it has more upside although I cant guarantee it.
Hard to see Carl not offering $18 anyway despite them shunning his apparently higher bid.
Carls strategy was smart but PBY threw it back at him and said we are dancing with the one who brought us unless you clearly put up a higher offer. And 8.3 cents shouldn't stop him from bidding again.
Bridgstones advantage is now $39.5 million or 73 cents per share. And they added about 8.3 cents to it for the 50 cent increase.
So does Carl go all the way & offer $18 or chance it at $17.50.
Or he might offer $18.017 which was his max before the increased walk away fee.
Or better yet, blow them out of the water and offer 18.50 ?
Else Bridgestone could have just matched the $16.50.
Carls bid technically expired but they cant turn down a higher bid. His attempt to circumvent the first winner advantage has backfired. So I think he offers $18.10 less the increased $4.5 million walk away fee. Then bridgestone will match it.
And Carl can either go higher or sell for a nice almost riskless gain. If there are several rounds, I think the walkaway will increase each time but by a modest amount. And Carls offer wont accept it which means PBY will manually deduct it from his offer.
Bottom line is Bridgestone has & will always have the right of first refusal. The only way Carl wins is if Bridgestone says no & walks away. But its interesting that PBY didn't even mention Carls potential $18.10 offer here. Because if he is willing to pay $18, there is no way it gets sold for $17.
I can see them not agreeing to a dime increment. But not a dollar.
Let the biggest ego win. And overpay.
This is almost criminal. They threw Carl under the bus and increased the buyout even when he was willing to pay more.
However, the increase in the walk away fee shouldn't dissuade Carl fro, formally offering more. Its almost as if they first threw Bridgestone under the bus by accepting such an unconventional ratchet deal but now they ignored it and are going with the bird in the hand I guess. Sounds like they gave the advantage back to the first bidder.
Will be interesting to see how Carl responds. His automatic 10 cent increase is now dead because they accepted a deal with an increased buyout fee.
Carl will no doubt offer more but what kind of increments will it accept ?
Will Carl end up offering more than his stated $18.10 or getting frustrated & walking away over it ?
This sort of encourages Carl to bid his highest before they increase the walk away fee again and again.
Would love to see $18.50. Its reasonably possible.
That was out yesterday...24 hours ago. We don't have any detail.
The PBY filing says they have until 5 pm, Carls filing says 8pm. Something tells me we wont hear anything until the weekend at the earliest.
My hope is that Bridgestone has already made a $17+ offer. But it sounds like they are mad that PBY gave Carl the deal they did...which is king of unusual but at that point, Carl was in the drivers seat because he had beat their offer. And it was fair game to negotiate with him even further. I guess Bridgestone could make a similar offer,$18.15 and promise to beat any legit offer from Carl.
Although I think their deal allows them to just match het $18.10. In my JAX deal years ago, the original party matched several better offers and finally ended up winning by offering a 25 cent premium.
I cant recall exactly but I think it started at $13 and ended up at $15.50 after the other bidder went to $15.25 and the winning bidder beat it despite not having to. (And they didn't in prior offers)
I hope that PBY lets us know something tonight.
Looks like I really missed the top but now its below my sale price of 5 and a half years ago.
I still hold a little NICK. Would like more exposure but the entire subprime finance business has had far too much money thrown at it in recent years.
Its cheaper for people to quit paying for a car, let it get repoed and then buy from another lot who doesn't care if you just had a repo.
CRMT has always had such a low down payment that I don't see how the math can work.
6.4% down is just not enough. I mean an average down payment on an average car is $660.
That's just not enough skin in the game.
Plus, they are getting hammered on repos losing 75%.
Probably should have replaced the CEO here. He should have forseen this big problem.
And buying back stock at sky high levels was also a bad idea.
I don't see $6-7. That'd be a 4.86-5.67 % yield. I don't think its that high quality.
happy to see $4.51. Also wonder if another follow on offering is in the cards.
There has to be some limit to the amount of low risk subprime loans at high rates they can lend out.
Thinking back to the JAX deal years ago, I think the final winning bid by the original bidder was 25 cents higher than a competing bid even though they didn't have to. So hopefully we have a few more rounds to go here. That was after matching a competing offer several times.
This makes, I don't know somewhere in the 50-55 straight quarters of massive losses.
For the last 9 months, that's nearly a $3 million loss.
And I don't know about you all, but the 13+ straight years of going concern clauses always gives me warm comfort.
But, its a growth stock. Their shares outstanding continues to grow like wildfire to pay for their ongoing losses & of course hype is expensive.
A 3rd party could get involved I guess. One of the other auto parts companies could make a higher offer.
Right now it seems unlikely given that the stock has fallen a buck from its high.
Im guessing Carl will trade his block of stock for a block of their retail stores, if not all of them.
But, if ORLY or Auto Zone or whoever also wants, they could make a higher offer.
$15.50 might just have to do. I had a $16.49 limit order to sell some but cancelled it the day before it go there because it looked like it might go higher. Plus, I want to defer my gains.