Over the past several years, Outerwall, formerly known as Coinstar, has alternated from being a momo favorite and hated stock. Having soared as much as $83 in the past year, the stock of the company which has a network of movie and video game rental kiosks as well as coin-cashing machines tumbled at the end of 2015 as the business model started to fizzle. It also meant the piling in of an army of shorts… all of whom were unpleasantly surprised in early March when the company announced it is looking to sell itself.
However, despite the warning, the shorts persisted, and according to Bloomberg, nearly half or 46% of the stock float, was shorted most recently.
Those same shorts were just as unpleasantly surprised moments ago, when much to the chagrin of bears, the company announced that it would sell itself to PE giant Apollo for $52.
As the company justified the transaction, “the purchase price represents a premium of approximately 51 percent over Outerwall’s closing stock price on March 14, 2016, immediately prior to the announcement that the Company’s Board of Directors initiated a thorough and comprehensive process to explore strategic and financial alternatives to maximize shareholder value. The transaction, which was unanimously approved by Outerwall’s Board of Directors, has a total enterprise value of approximately $1.6 billion, including net debt.”
With a short interest of nearly half, OUTR was among the top ten “most
hated” stocks as calculated by Goldman as of the start of the year when it was trading well below $40…
… the same “most hated” group of stocks
which we have repeatedly hinted as being the best long picks, precisely due to
risk events such as this one.
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From the press release:
“Outerwall’s Board of Directors has undertaken a comprehensive review of a wide range of strategic and financial alternatives to maximize value for all Outerwall shareholders. We are pleased to reach this agreement, which follows a robust process and provides an immediate and substantial cash premium to our shareholders,” said Erik E. Prusch, Outerwall’s Chief Executive Officer. “Apollo is an ideal partner to support Outerwall’s efforts to continue serving our millions of loyal customers and dedicated retail partners through our unrivaled network of kiosks and automated retail offerings. We look forward to working closely with Apollo as we continue to strengthen our businesses and execute on our strategic plan.”
“We are extremely excited for our funds to acquire Outerwall,” said David Sambur, Partner at Apollo. “Outerwall is a dynamic customer-focused business that delivers superior kiosk experiences that delight consumers and generate value for its retailer partners. We look forward to working with Outerwall’s talented and dedicated team to continue the business’s strong heritage of growth and innovation.”
Transaction Details
The transaction will be completed through an all-cash tender offer. The Outerwall Board of Directors unanimously recommends that Outerwall shareholders tender their shares in the offer.
The transaction is conditioned upon satisfaction of the minimum tender condition, which requires that shares representing more than 50 percent of the Company’s common shares be tendered and the receipt of certain regulatory approvals and other customary closing conditions. The transaction is currently expected to close during the third quarter of 2016. Following the transaction, Outerwall will become a privately held company and Outerwall’s common shares will no longer be listed on any public market.
Morgan Stanley & Co. LLC is serving as financial advisor to Outerwall and Wachtell, Lipton, Rosen & Katz and Perkins Coie LLP are serving as legal counsel. LionTree Advisors, Bank of America Merrill Lynch, Barclays, Credit Suisse and Jefferies LLC are acting as M&A advisors to Apollo and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor to Apollo.
Financing is being provided by Bank of America Merrill Lynch, Jefferies Finance LLC, Barclays and Credit Suisse.
Outerwall plans to release its second quarter earnings after market close on Thursday, July 28 and does not intend to hold a conference call to discuss earnings given the announced sale of the Company.
via http://ift.tt/2aFrJB1 Tyler Durden