Without Cramer, Takeover of TheStreet Not Viable

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In theory, any investment firm with enough money could make an offer for TheStreet.com (TST). The major hurdle to a takeover is that, without Jim Cramer, the founder and face of the public company, its value would fall precipitously. That leaves a new owner with a business that could be damaged beyond repair.

Cramer continues to hold 6.2% of the shares outstanding, according to the company's proxy, but he has had a regular plan to sell portions of his holding for some time. Some of these shares are held indirectly. Another hurdle, less important than Cramer's future plans, are the holdings of Technology Crossover Ventures (TCV), which as of the last proxy had a 10.6% ownership stake, but has been calculated as high as 11.5%. TCV has a special call on assets, due to terms of a $55 million investment it made in TheStreet. This represents another hurdle. There is no reason to believe TCV would take less than its original investment to cash out.

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Cramer's contract runs through the end of 2013, but he could legally cancel it at any time. This puts both current shareholders and any company that hopes to take over TheStreet at considerable risk.

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According to media reports "private equity group Spear Point Buyout Group" would like to have the preferred shares eliminated, although TCV would not do so under conditions likely favorable to a buyer. Spear Point Buyout Group has indicated that it may go so far as to make an offer for TheStreet.

What would a new owner do without Cramer? Suffer a lose of both reputation and a tremendous amount of revenue.

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