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April 26, 2022, 3:42 p.m. EDT

Rare Poison Pill Strategy an Oddity Among Premium Price Takeover Bids Flurry

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Apr 26, 2022 (Baystreet.ca via COMTEX) -- USA News Group – Prior to the recent takeover bid of Twitter Inc. /zigman2/quotes/203180645/composite TWTR -1.08% , by the world’s wealthiest man, Elon Musk, the term “poison pill” was rarely uttered in the market. A quick glance at Google Trends shows how the term was virtually non-existent in searches until Twitter’s Board of Directors decided on behalf of shareholders to deny a 20% premium over the closing price before Musk’s offer went public, and a 57% premium over the March 7 closing price. Musk’s response to the attempted thwarting has at least been entertaining, with a series of cryptic tweets and publicly teasing a Plan B at a Ted Talk. However, so-called poison pills are quite rare, as premium prices typically yield favorable responses, like those seen in the takeover bids of energy tech developers Petroteq Energy, Inc. /zigman2/quotes/208122736/delayed PQEFF -1.47% by Viston United Swiss AG, Australian Ramsay Health Care by a group led by KKR & Co. Inc. /zigman2/quotes/206126495/composite KKR -2.24% , and the $250-million acquisition of Checkmate Pharmaceuticals, Inc. by Regeneron Pharmaceuticals, Inc. /zigman2/quotes/203149337/composite REGN -1.09% .

Founder and ex-CEO of Twitter Inc. /zigman2/quotes/203180645/composite TWTR -1.08% Jack Dorsey has criticized his former company’s Board (which he still sits on) for its response. Dorsey has been open of his plans to leave the board once his term expires at this year’s shareholders meeting, which is scheduled for late May.

On the Twitter platform itself, Dorsey replied to a user describing the “plots and coups” that played out early on in the history of Twitter’s board, stating “it’s consistently been the dysfunction of the company.”

In another instance, Dorsey responded to a separate tweet in the same thread, which quoted venture capitalist Fred Destin citing what he called a “Silicon Valley proverb”: “Good boards don’t create good companies, but a bad board will kill a company every time.”

Dorsey’s response?: “big facts.”

Now that Twitter has adopted the poison pill model, shareholders of the company currently await Musk’s next move .

Unlike Twitter’s frosty response to Musk, the Board, Management and Largest Shareholders of Petroteq Energy, Inc. /zigman2/quotes/208122736/delayed PQEFF -1.47% , developers of the proprietary Clean Oil Recovery Technology (CORT) , have been publicly positive towards the takeover attempt by clean technologies investment firm Viston United Swiss AG.

In this case, the C$0.195 per share offer when it was first submitted represented a 1,032% premium over the TSX-V volume-weighted average price of $0.065 per common share for the 52-week period preceding April 15, 2021—the last trading day prior to the publication of the voluntary purchase offer in Germany.

Prior to the previous April 14 [th] deadline, a growing number of prominent shareholders signalled their openness to tendering their shares, including unanimous intention to tender shares from the Board of Directors, Petroteq’s Founder , Former Chairman and CEO Alex Blyumkin, and one of the company’s largest shareholders , Cantone Asset Management, LLC, which hold and have tendered approximately 120,000,000 shares of the Petroteq’s common stock.

Now another extension has been agreed upon that now gives a deadline of June 17, 2022 .

“Over the past 10 years, I have put all my time, energy and fortune into developing an environmentally friendly technology for water-free and emission-free oil production,” said Blyumkin, who announced his intention to donate half of his profit towards humanitarian purposes in his home country. “It is no coincidence that in this phase we received a takeover offer which, although I believe it is well below the potential value of the company, will provide certainty and immediate liquidity to the nearly 10,000 shareholders and open up new prospects for the company.”

At C$0.74 (US$0.59) per common share, Viston’s offer gave Petroteq a valuation of 279% over the closing price of C$0.195 on the TSX-V August 6, 2021—the day prior to the Canadian exchange’s cease trade order began.

For many months, shares of Petroteq on the Canadian Exchange have ceased trading. However, in the USA, investors can continue to trade shares under the OTC symbol PQEFF, in a form of merger arbitrage trading.

Shares of PQEFF continue to trading at ~US$0.32 as of April 20, 2022. This means there’s still a near 85.5% premium left available for those who follow through offering their shares to the buyer through the official takeover offer website PetroTeqoffer.com .

In the case of Ramsay Health Care, the company’s largest shareholder also supports a takeover offer from a group being led by KKR & Co. Inc. /zigman2/quotes/206126495/composite KKR -2.24% . According to a report from Reuters, the Paul Ramsay Foundation holds an 18.8% stake in the company, and is in favor of the near-$15 billion bid from KKR.

Shares of the Australian company went up by as much as 30% upon news of the KKR buyout attempt. If successful, the takeover would rank as the biggest private equity-backed buyout of an Australian company, and would be the biggest deal in Australia this year.

"The 31.3% premium to Ramsay's price over the last six months is reasonable for a change of control," said Brian Freitas, an analyst who publishes on research platform Smartkarma.

"The share offer implies a forward earnings multiple of 33x versus an average of 17x for its peers, so shareholders should be fine with the proposed offer price."

/zigman2/quotes/203180645/composite
US : U.S.: NYSE
$ 37.39
-0.41 -1.08%
Volume: 7.13M
June 30, 2022 4:05p
P/E Ratio
163.85
Dividend Yield
N/A
Market Cap
$28.89 billion
Rev. per Employee
$698,993
loading...
/zigman2/quotes/208122736/delayed
US : U.S.: OTC
$ 0.20
-0.0029 -1.47%
Volume: 949,060
June 30, 2022 3:57p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$151.59 million
Rev. per Employee
N/A
loading...
/zigman2/quotes/206126495/composite
US : U.S.: NYSE
$ 46.29
-1.06 -2.24%
Volume: 2.55M
June 30, 2022 4:00p
P/E Ratio
10.18
Dividend Yield
1.34%
Market Cap
$28.06 billion
Rev. per Employee
$4.44M
loading...
/zigman2/quotes/203149337/composite
US : U.S.: Nasdaq
$ 591.13
-6.49 -1.09%
Volume: 685,395
June 30, 2022 4:00p
P/E Ratio
8.37
Dividend Yield
N/A
Market Cap
$65.65 billion
Rev. per Employee
$1.59M
loading...
/zigman2/quotes/203180645/composite
US : U.S.: NYSE
$ 37.39
-0.41 -1.08%
Volume: 7.13M
June 30, 2022 4:05p
P/E Ratio
163.85
Dividend Yield
N/A
Market Cap
$28.89 billion
Rev. per Employee
$698,993
loading...
/zigman2/quotes/208122736/delayed
US : U.S.: OTC
$ 0.20
-0.0029 -1.47%
Volume: 949,060
June 30, 2022 3:57p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$151.59 million
Rev. per Employee
N/A
loading...
/zigman2/quotes/206126495/composite
US : U.S.: NYSE
$ 46.29
-1.06 -2.24%
Volume: 2.55M
June 30, 2022 4:00p
P/E Ratio
10.18
Dividend Yield
1.34%
Market Cap
$28.06 billion
Rev. per Employee
$4.44M
loading...
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