Technically, most companies would "shop around" their company to make certain they were getting the best return on the sale of their company, but I suppose if the premium was high enough, as it appears to be in this case, there may be less of an argument to be made.
At least one story I read claims that Apple isn't planning to consume the company but leave it in tact as a subsidiary and the stockholders are keeping their stock shares etc, which are likely to jump in value just based on the Apple connection.
So it sounds like some facts need to be checked before we know what the score really is
On the other hand, as an AAPL shareholder, it does make me happy that they're actively looking for companies out there to buy. And they're not only looking in the US either, I think Anobit was a privately held Israeli company. So, they probably have people looking at this all over the world. I also like they're focusing on small companies with lots of potential. Very easy to integrate, and you're mostly getting them for IP and the talent pool.
I can imagine being in that M&A department must be really exciting. You've got more money than God, what would be the best way to spend all that money?
I also expect the Kodak patent sales to go to the Apple-led group next week. Unless it's some ridiculous price, I'm pretty sure between Apple and Microsoft will scrounge up for it, and then extract royalties/payments from Google, Samsung, et al.
Price was fair considering company's balance sheet. This is just a law firm trying to spread its name around even though they know there is no class action that will come of it.
These guys have tried this with several companies already.
Yep. As I recall the stock is only valued at like $5 a share. But because it's Apple folks think they should get like $800 a share 'because Apple can afford it'.
I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?
Yep. As I recall the stock is only valued at like $5 a share. But because it's Apple folks think they should get like $800 a share 'because Apple can afford it'.
I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?
With small companies a large proportion of the shares may be owned by the officers of the company. It may take a large premium to persuade them to sell, rather than
continuing to control the company and realizing (what they believe to be) its great potential for growth. There also may be venture capitalists who were involved in funding
I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?
The whole is greater than the sum of its parts, essentially. For the reasons mentioned above (Synergies, control etc.). Also, the value of a company is increased by interest in buying it (Demand dictates price) so a premium has to be offered to account for that increase too.
so a class action suit because there was not an insider information leak!. it seems to me that they are being sued because they did not state that [u] apple is about to buy us, who wants to pay more?[u]
if apple paid the going rate, instead of 58% more, then i can see a law suit...
I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?
A number of reasons:
1. You're assuming that there's only one value for a stock, but in reality, every owner has a different value. The current share price is the value assigned by a person who is willing to sell. Let's say that stock is owned by Bill (who values it at $20 and wouldn't sell it for less), Tom (who values it at $25 and wouldn't sell it for less) and Harry (who values it at $30 and wouldn't sell it for less). Now, a buyer comes along who is willing to pay $20 for the stock. Only Bill's shares would change hands and the 'market price' would be $20. Now, if someone wants to buy ALL the stock, they would have to pay $30 in order to get all the shares from Bill, Tom, and Harry. (In reality, it may not be possible to set the price high enough to get ALL the shares, so you may have to settle for getting most of the shares and then force the remainder of shareholders to sell after you control the company).
In short, 'market price' is set by people who are willing to sell. 'Acquisition price' is set by people who are not.
2. Supply and demand. When there is increased demand for a stock (from any source), the share price goes up. When someone expresses interest in buying a company, the shareholders' expectations of share price will increase. Even if you try to buy shares on the market without disclosing your interest (although there are strict limits on how much stock you can buy without disclosure), it will drive the price up. In the above example, after you have Bill's shares, if you want to buy more, you need to pay $25.
It sounds stupid, but that's exactly what happened in China with the iPad trademark. Shell company set up by Apple bought it for $50K, when iPad was nowhere close to being the household name it is now. A big part of the lawsuit, I think, was that Apple was not honest about it. Apple ended up paying them $60M I think. That's OVER 1000 times what Apple had ALREADY paid.
I honestly think in this case, these troll lawyer firms have no case. 58% premium to current market closing price is as good as it gets.
Get into the real world here. All major companies use proxies when buying trademarks and sometimes copyrights, and even patents. If $55,000 was what Prosoft thought the trademark was worth, then that was what it should have been sold for.
Meanwhile, Apple produced a contract showing that the Chinese company did indeed sell this trademark in China, and the person signing the contract for Prosoft was the same guy saying that they didn't sell the trademark in China. The Chinese courts aren't known for treading fairly with foreign companies. The $60 million was a ripoff.
As far as fiduciary duty is concerned, it's more complex. A board doesn't HAVE to shop their company around if they think they are getting a good enough deal. There is more to these deals than the money on the table.
On the other hand, if Google or Samsung are willing to bid much higher, then they might have to entertain those bids, assuming that the deal isn't already closed.
Apple has bought a lot of companies, and those deals weren't challenged. So have other companies. Google paid $12.5 billion for Motorola when the company on that day was valued at $6.5 billion because they were afraid that they would be outbid, and they desperately wanted it.
Likely they had not even considered a sale to anyone. Then along came Apple and they started working together. Once Apple realized they are worth having they made an offer. Totally legal. No shopping required.
But very often, once a company receives an offer, they do shop around. After all, if one large company is willing to pay a certain amount, it's possible that another is willing to pay more.
As you will learn if you stick around long enough, the excuse is that AppleInsider "isn't a news site, it's a blog"... I still think they should uphold journalistic standards since they are regularly cited by other news sites.
Haha yeah but then AI and most other blogs will have to learn proper grammar!
Technically, most companies would "shop around" their company to make certain they were getting the best return on the sale of their company, but I suppose if the premium was high enough, as it appears to be in this case, there may be less of an argument to be made.
And whos to say that they didn't shop around? I doubt they could do better than Apple. Apple has the cash to actually paid in real money.
Comments
At least one story I read claims that Apple isn't planning to consume the company but leave it in tact as a subsidiary and the stockholders are keeping their stock shares etc, which are likely to jump in value just based on the Apple connection.
So it sounds like some facts need to be checked before we know what the score really is
On the other hand, as an AAPL shareholder, it does make me happy that they're actively looking for companies out there to buy. And they're not only looking in the US either, I think Anobit was a privately held Israeli company. So, they probably have people looking at this all over the world. I also like they're focusing on small companies with lots of potential. Very easy to integrate, and you're mostly getting them for IP and the talent pool.
I can imagine being in that M&A department must be really exciting. You've got more money than God, what would be the best way to spend all that money?
I also expect the Kodak patent sales to go to the Apple-led group next week. Unless it's some ridiculous price, I'm pretty sure between Apple and Microsoft will scrounge up for it, and then extract royalties/payments from Google, Samsung, et al.
Quote:
Originally Posted by battiato1981
All their shareholders just made a 66% gain in a single day ...
Good luck finding someone to pity them for not making enough.
Lawyer trolls ...
I bought AUTH a few days ago. I don't feel hoodwinked.
I would love to have a fingerprint scanner on a future Iphone
Just a bunch of shysters. Ignore these parasites and they'll go away.
Price was fair considering company's balance sheet. This is just a law firm trying to spread its name around even though they know there is no class action that will come of it.
These guys have tried this with several companies already.
I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?
The synergies that the acquirer thinks (s)he can bring to the target.
Quote:
Originally Posted by JeffDM
Quote:
Originally Posted by charlituna
Yep. As I recall the stock is only valued at like $5 a share. But because it's Apple folks think they should get like $800 a share 'because Apple can afford it'.
I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?
With small companies a large proportion of the shares may be owned by the officers of the company. It may take a large premium to persuade them to sell, rather than
continuing to control the company and realizing (what they believe to be) its great potential for growth. There also may be venture capitalists who were involved in funding
the startup who need to be satisfied.
Quote:
Originally Posted by JeffDM
I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?
The whole is greater than the sum of its parts, essentially. For the reasons mentioned above (Synergies, control etc.). Also, the value of a company is increased by interest in buying it (Demand dictates price) so a premium has to be offered to account for that increase too.
it seems to me that they are being sued because they did not state that [u] apple is about to buy us, who wants to pay more?[u]
if apple paid the going rate, instead of 58% more, then i can see a law suit...
A number of reasons:
1. You're assuming that there's only one value for a stock, but in reality, every owner has a different value. The current share price is the value assigned by a person who is willing to sell. Let's say that stock is owned by Bill (who values it at $20 and wouldn't sell it for less), Tom (who values it at $25 and wouldn't sell it for less) and Harry (who values it at $30 and wouldn't sell it for less). Now, a buyer comes along who is willing to pay $20 for the stock. Only Bill's shares would change hands and the 'market price' would be $20. Now, if someone wants to buy ALL the stock, they would have to pay $30 in order to get all the shares from Bill, Tom, and Harry. (In reality, it may not be possible to set the price high enough to get ALL the shares, so you may have to settle for getting most of the shares and then force the remainder of shareholders to sell after you control the company).
In short, 'market price' is set by people who are willing to sell. 'Acquisition price' is set by people who are not.
2. Supply and demand. When there is increased demand for a stock (from any source), the share price goes up. When someone expresses interest in buying a company, the shareholders' expectations of share price will increase. Even if you try to buy shares on the market without disclosing your interest (although there are strict limits on how much stock you can buy without disclosure), it will drive the price up. In the above example, after you have Bill's shares, if you want to buy more, you need to pay $25.
Apple to class-action shareholders, "maybe we won't buy and you can keep your 2 bit shares."
But they could have made 70%! And the Lawyers could easily get 30% of those profits as fees.
Quote:
Originally Posted by msimpson
Geez, lawyers. I wonder how many of them dream every night about suing Apple and its big cash hoard.
It would be nice if we had a law that for every frivolous case a lawyer files, and loses, they get an appendage cut off. A hand or a foot to start.
If you really want this to stop, chose a different appendage to start with.
Get into the real world here. All major companies use proxies when buying trademarks and sometimes copyrights, and even patents. If $55,000 was what Prosoft thought the trademark was worth, then that was what it should have been sold for.
Meanwhile, Apple produced a contract showing that the Chinese company did indeed sell this trademark in China, and the person signing the contract for Prosoft was the same guy saying that they didn't sell the trademark in China. The Chinese courts aren't known for treading fairly with foreign companies. The $60 million was a ripoff.
As far as fiduciary duty is concerned, it's more complex. A board doesn't HAVE to shop their company around if they think they are getting a good enough deal. There is more to these deals than the money on the table.
On the other hand, if Google or Samsung are willing to bid much higher, then they might have to entertain those bids, assuming that the deal isn't already closed.
Apple has bought a lot of companies, and those deals weren't challenged. So have other companies. Google paid $12.5 billion for Motorola when the company on that day was valued at $6.5 billion because they were afraid that they would be outbid, and they desperately wanted it.
But very often, once a company receives an offer, they do shop around. After all, if one large company is willing to pay a certain amount, it's possible that another is willing to pay more.
Usually, there's about a 30% premium, so the price here is a very good one for them.
There are intangibles, such as goodwill involved. Also, why would a company be willing to sell if there was no premium?
Quote:
Originally Posted by SpamSandwich
As you will learn if you stick around long enough, the excuse is that AppleInsider "isn't a news site, it's a blog"... I still think they should uphold journalistic standards since they are regularly cited by other news sites.
Haha yeah but then AI and most other blogs will have to learn proper grammar!
Quote:
Originally Posted by SpamSandwich
Technically, most companies would "shop around" their company to make certain they were getting the best return on the sale of their company, but I suppose if the premium was high enough, as it appears to be in this case, there may be less of an argument to be made.
And whos to say that they didn't shop around? I doubt they could do better than Apple. Apple has the cash to actually paid in real money.