Description
1. Amanecer in mid-2015
In the second quarter of 2015, the Management Board of Amanecer considered development opportunities through mergers and acquisitions. Among the available investment opportunities, the purchase of two small companies, proposed by Carl Castello, was abandoned quite quickly. The purchase offer signaled to the target’s owners of the company met with interest, but it turned out that despite good financial results, both companies were seriously indebted and the owner’s financial expectations were excessive. Amanecer Financial Director – Bernard Bruno – did not agree to risk the financial stability of the company, and the other members of the Management Board after more or less resistance agreed with him.
At the end of May 2015, representatives of Miguel SA came to the company’s Management Board and proposed merger talks. The initial expectations of the potential partner indicated the desire to merge by uniting at a 250: 1 parity, i.e. in the new company each Amanecer shareholder would take up 250 new issue shares for 1 Amanecer share, while Miguel shares would give their holders 1 share in the combined company. As a result, out of 6.358.500 shares in the newly created company, 3.358.500 (52%) would take up its shareholders in exchange for Amanecer shares. The company’s founders would have 7.9% shares and votes instead of the current 15% (Ademar Adani), 6.33% instead of 12% (Bernard Bruno) and 5.28% instead of 10% (Carl Castello) respectively. The largest shareholders in the combined company would be the financial shareholders: OFE BCP – 15.2%, Banco Integrale – 8.7% and OFE Junto – 8.2%. The exchange parity proposed by Miguel was clearly different than that resulting from the comparison of the book value and historical profits of both companies, but much closer to the market valuation. No wonder that he did not raise the enthusiasm of the company’s main owners.
. The Management Board of the Company decided to negotiate better exchange parity, the more so that significant institutional shareholders approached the idea with interest – partly because they also had significant blocks of shares in Miguel SA in their portfolio. They initially suggested a 400:1 parity based on a comparison of sales revenues (then Amanecer shareholders would take up 64% of the shares of the newly formed company for their shares), but Miguel’s representatives presenting the results for the first quarter (almost 5 million seso net profit of each company) pointed to a lower Amanecer’s ROE. They also added that market valuation is a key factor, and this indicates the comparable value of both companies. This last argument was particularly frustrating for the Amanecer authorities, because at the turn of quarters the price of the company’s shares fell by a dozen or so percent and by June it did not recover (Bernard Bruno even suspected that rumors about the takeover of small manufacturers were responsible for a significant part of the decrease)
In the second half of June 2015 – when it seemed that the positions of the management boards of both companies were so distant that it would be impossible to find a solution acceptable by both sides – unexpectedly, the Amanecer stock price began to rise. In the first half of July it reached the level of 3,200 seso per share, which caused quite excitement among the company’s key managers informed about the merger with Miguel. The return of the share price to quotations from a few months ago gave serious arguments to the company’s authorities in negotiations with Miguel, which was intended to resume after the holiday season.
Only Bernard Bruno was far from enthusiastic. He suspected that the increase of share prices was caused by Miguel’s action. Potential partner may have decided to implement the acquisition of Amanecer. Admittedly, Amanecer was a company larger than Miguel, but it had such a dispersed shareholding that gaining control (with the support or friendly neutrality of OFE Junto, OFE BCP and Banco Integrale) would not require the acquisition of large amounts of shares. The financial director was also concerned about the emotional state of president Adani, who after the failure of the takeover plans of the company seemed to be withdrawn and somewhat dim.
In this situation, even the vacation for which Bernard Bruno planned to leave on July 15, was not enugh to enjoy, and at last minute he delayed the trip for a week. When Amanecer stock prices stabilized at around 3,000 seso each and daily turnover ceased to break historical records and returned to normal (3 times lower than at 2,600 seso per share), another information caused a great stir among the shareholders and management of the company.