Eidos Share Discussion Threads

[gnnmartin] 13/2/2009 20:08

Darren, the RNS strongly suggests that WB weren't in on the discussions. It says "Warner Bros Entertainment Inc. is contractually obliged ... to provide an irrevocable undertaking" whereas if WB were in the loop they would surely have said "Warner Bros Entertainment Inc. have given an irrevocable undertaking".

If the deal goes through, WB will end up with no equity interest in Eidos. I don't think they will like that. That doesn't mean they will bid, of course, but it is at least a possibility.
Nigel Martin

[life of crime] 13/2/2009 20:07

Interesting interview with UbiSoft, who had a good Christmas despite PoP under performing. The penulitmate paragraph in particular is very pertinent! Confirms my suspicion that they will be interested in entering the fray, possibly using the strength of their share price to make an all or part stock offer:

[life of crime] 13/2/2009 18:53

Fair point, I forgot about the undertakings, so TW must have known. I would still be really surprised though if they didn't bid, as it flies in the face of their previous investments in Eidos and the industry in general. But, you never know. Perhaps they have been waiting for a formal bid to be tabled before making a decision.

Still, we should know in the next week or two if another bid will emerge. I've been wrong before, but I would be amazed if another offer did not come through from the likes of TW, EA or UbiSoft (the more, the merrier!).

PS. This would have been a setback a couple of days ago, but it seems pretty trivial now:

[darrens] 13/2/2009 18:37

Well, I think they must have been made aware of the price...other shareholders obviously were (the ones who gave an irrevocable undertaking) so I just don't think TW with a fifth of the company could have not been told.

[life of crime] 13/2/2009 17:55

I think you're right about TW being aware of the bid Darren, but that doesn't necessarily mean they were privy to the price that was being offered (commercial confidentiality, etc) so I'm still expecting them to make an offer.

If they don't then they will be crystalising a hefty loss, which they can afford of course, but to me it would not make sense. They have already spent hundreds of millions moving into this industry, so why let an opportunity like this slip away when even at, say, 50p it would only cost them another £120M. They paid £100M alone for TT, a single studio with no owned IP (although they do have the Lego rights).

As you say, strange things happen (I never expected Square to bid) but it would really surprise me if TW walked away from this and bagged a loss into the bargain. My preference would be a stock swap from UbiSoft because their management impress me and they could fully exploit the IP in a way that has never been done by a succession of Eidos boards.

Either way, I'm expecting a counter bid from somebody - it will be interesting to see who.

[darrens] 13/2/2009 16:30

Well, I haven't been following this like a hawk since the announcement but interesting that there are decent sized bids at 32 1/4, i.e. there's some belief a higher bid will come along.

Personally I think it unlikely, only because I'm sure TW were made insiders over the Square Enix negotiations so the Board would have already asked TW if they wanted to go higher before accepting the Square Enix bid.

However, always a lottery in these situations and you never know - stranger things have happened.

[gnnmartin] 13/2/2009 15:12

OK. Time will tell.

[damac] 13/2/2009 14:26

To me it reads that for it to go through, those voting in favour must hold at least 75% of the shares in Edios.

[gnnmartin] 13/2/2009 13:51

Damac, as you yourself quote " In order to become effective, the
Scheme must be approved by a majority in number of the holders of Eidos Shares
present and voting, either in person or by proxy, representing at least 75 per
cent. in value of the Eidos Shares held by such Eidos Shareholders".

That tells me that it is 75% of those voting. Usually these things are carried on a show of hands unless someone (any one) objects, in which case the actual holdings are totted up.
Nigel Martin

[zelig] 13/2/2009 10:30

and here's the original article



Pretty much the same. The've jut taken a view with the headline

[zelig] 13/2/2009 10:27

I don't think the article particularly qualifies the headline but worth a read

[the crypt] 13/2/2009 09:24

lol - took a slice of sell today - and still holding 10,000 lol - may them laffs be great.

[damac] 13/2/2009 09:21

L2

125,000 32.25 V 33 100,000
2,188,922 32 V 33.25 110,000
5,452,383 31.75 V 34 24,000
2,564,800 31.5 V 34.25 24,000
18,000 31.25 V 37.5 50,000


Still a lot of support on the buy side, market must think the odds are in favour of a bidding war.

[damac] 13/2/2009 09:08

TW are still in pole position with the largest shareholding (20%), therefore it only takes 6% of other shareholders to vote against and deal off or SEQX has to increase the bid.

[dealy] 13/2/2009 09:06

This reminds me of QXL....

[damac] 13/2/2009 09:00

gnnmartin,

With regrads to the 75%????


"The Offer will be put to Eidos Shareholders at the Court Meeting
and at the Extraordinary General Meeting. In order to become effective, the
Scheme must be approved by a majority in number of the holders of Eidos Shares
present and voting, either in person or by proxy, representing at least 75 per
cent. in value of the Eidos Shares held by such Eidos Shareholders.

In addition,a special resolution implementing the Scheme and approving the related Capital Reduction must be passed by Eidos Shareholders representing 75 per cent. of the votes cast at the Extraordinary General Meeting. The special resolution will also approve amendments to the articles of association of Eidos and, if necessary, to certain Eidos Share Schemes."


As I read the above, the offer only becomes effective if it is accepted by 75% of the entire Edios shareholders, not 75% of those who vote. The 75% of those who vote is only in relation to the implementation of the scheme and the related Capital Reduction.

[bethany3] 13/2/2009 00:23

gnnmartin......apart from TW, who might have other ideas, I'd expect every other shareholder to vote in favour - it's in their interest. Voting in favour means accepting SQEX offer of 32pps - as good as pledging/undertaking to sell their holdings (BoD and institutions) to SQEX or am I wrong?

[gnnmartin] 12/2/2009 23:35

Bethany, no. Looky has it right (post 901). The directors must vote in favour of the SQEX scheme, but if less than 75% (of those who vote) vote in favour, the scheme lapses and the directors can do what they want with their shares.

I strongly expect that everyone will vote in favour unless there is a better bid. That's what I'm banking on, but of course, nothing's certain: WB may take a different view of their obligations, and may prefer the status quo.

[bethany3] 12/2/2009 21:05

PeterBill......the Board of Directors (BoD) who are shareholders are bound by the agreement that they must sell their holdings to SQEX regardless of any higher offer, even if it's 100p, from a third party (TW perhaps) unless the offer document from SQEX is not dispatched within 28 days. This is not the norm in a takeover - it's just a test of faith or ring fenced the commitment from BoD.

The minimum 15% premium on top of the 32p already offered by SQEX only applies to institutional holders ie. if a third party like TW bids at least (32p+16%) then they (institutional holders) are allowed to change their minds and not bound by SQEX offer condition ie selling to TW, unless SQEX counter bids with a higher offer than TW. If TW only bids 33p then they must sell their holdings to SQEX.

SQEX will not increase their 32p offer or make a counter bid (but reserves the right too, usually) unless a third party makes a higher offer (then more likely to be at at least 15% premium). Think the 15% premium is SQEX's 'profit margin' to cover costs incur should they are not successful.

[looky] 12/2/2009 20:59

The Directors will have to vote in favour - not sell their shares. If there is a higher bid (above 15%- as per institutional irrevocables) then no one else will vote in favour. The resolutions will be withdrawn - this is a scheme of arrangement. amt - i would not be so sure

[amt] 12/2/2009 20:31

I doubt if there will be a counter bid. Others will already have been approached and decided not to bid. The current bid is very high for such a poor company.

[peterbill] 12/2/2009 20:30

Bethany and Arc,

So if a higher bid comes along, say TW with a 15% premium on the 32p - the directors still have to sell their shares to SQEX at 32p ... Is that the usual way in bid situations ... even if there is a counterbid by SQEX. Would that counterbid have to be at a 15% premium ... etc.

[gnnmartin] 12/2/2009 20:10

Frankyness, you say in post 867 that "GNMartin's (claims) that WB do not have to vote in favour of the bid". I was not claiming that, I was simply noting that WB obviously have not been consulted, so it is always possible that they have a different opinion as to what they are obliged to do. I don't think it is a BIG risk, but until WB acknowledge their obligation one cannot be entirely certain of their support.

Arc2006: the directors are only have to sell to SQEX if the SQEX scheme goes through. They don't have to sell to SQEX if (say) WB spike the deal, either by bidding more themselves, or by disagreeing that they are bound to support the deal even without a competing bid.
Nigel Martin