Merger or buyout (Questions - Possible Actions)

[bcdfgh]

I've heard about Precision Castparts (PCP) buying Titanium Metals (TIE). Here is the link www.marketwatch.com/story/precision-castparts-to-acquire-titanium-metals-2012-11-09-16485520. How does it work? Will TIE shareholders get PCP or cash?

[Deleted]

From the TIMET Investor Page (TIE) -

Under the terms of the merger agreement, PCC will commence by November 20, 2012 an all-cash tender offer to acquire 100 percent of the outstanding common stock of TIMET for $16.50 per TIMET share, net to the tendering holder in cash. PCC will acquire any TIMET shares that are not purchased in the tender offer in a second-step merger, at the same price per share paid in the tender offer. Completion of the tender offer will be subject to certain customary conditions, including tender of the majority of the outstanding shares of TIMET common stock not owned by TIMET's principal stockholders, Contran Corporation ("Contran") and its affiliates, who in the aggregate own approximately 54% of the outstanding shares of TIMET common stock, and the receipt of anti-trust approvals in the United States and the EU. The tender offer is expected to be completed in December 2012, subject to fulfillment of the conditions. Contran and certain of its affiliates, who collectively hold 45% of the outstanding shares of TIMET common stock, have committed to tender their shares in the tender offer. There can be no assurance that the tender offer will be completed, or if completed, that it will be completed in December 2012.

The Link to the Page is here -

www.timet.com/investorrelations

From the Precision Cast Parts Investor Site (PCC) -

Under the terms of the merger agreement, PCC will commence a cash tender offer by November 20, 2012 to acquire all outstanding shares of Timet for $16.50 per share, net to the tendering holder in cash. The offer will contain certain customary conditions, including tender of the majority of the outstanding shares not owned by Contran Corporation and affiliated entities, and approval by regulatory agencies. Upon satisfaction of the conditions to the tender offer and after such time as all shares tendered in the tender offer are accepted for payment, the merger agreement provides for the parties to effect, subject to customary closing conditions, a merger that would result in all shares not tendered in the tender offer being converted into the right to receive $16.50 per share in cash

The Link To that Page is Here -

www.precast.com/investors/press_release/?id=601

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We hope this Helps.

[bcdfgh]

Thanks Disinfranchised Investor for the info.

[Deleted]

NP.

[IPAfan]

So this is probably not appropriate for a thread on long term investing, but I'm going to post on it anyway.

I've been looking at the proposed LBO deal to buyout DELL at $13.50/share. A lot of people are upset and consider this a takeunder with a low FCF multiple. The 2nd biggest stockholder is STRONGLY opposed to the $13.50 buyout. A lot of people are speculating about the possibilities here. In any event, it looks likely that:

1) If the deal goes through as planned you get $13.50
2) The deal price possibly gets increased
3) Maybe the deal gets BLOCKED which might see the share price fall even though the rationale of blocking the deal is that $13.50 is far TOO LITTLE for a company with this type of earnings.

So it might be interesting to speculate on DELL with the reasonable likelihood of a good return in the next few months (if the offer price is increased or even if the market drives the price up so people vote against the deal). So I wanted to see if there are any interesting ways to play this with options which might given assymetrical risk:rewards.

One aggressive option is to buy the apr 13 $14 CALL for $.16. If the market price is driven up to $15 over the next month (a 10% increase in share price) you could see a 625% return. If the offer was increased on DELL, even slightly, you'd see a big return. Same thing if activist investors drive the price closer to $15. If the status quo continues you lose 100%.

A more conservative approach that still gives leverage.... the Aug 13 $10 strike Call is selling for $3.75 ask at close. If the deal closes at $13.50 you'd lose about 6.5%. OTOH if the price increased to $15 you'd make 33%+ in less than 6 months.

This type of speculation is fairly attractive to me because it offers a good chance of a good return in a definite amount of time, the risk is likely limited by the current LBO offer. It diversifies the portfolio away from market risk to special circumstances risk. The options leverage lets you make a small investment but leverage gives you the chance to make a meaningful return to the overall portfolio. Even a .16% position sizing of portfolio in the $14 calls could add 1% of portfolio performance for the entire portfolio (or more if the price went above $15 in the short term).