lt cap,

That's a very interesting article on Ichan-like 'raiders' pressing for a better deal with NOK from ALU. I'm really not familiar with the granular details of such actions but:

1. I'm wondering whether this is bad news from the viewpoint that such 'raiders' have no interest usually in the long term welfare of a company, rather than wrangling something from them that makes them money and then disappearing, on to the next lamb to the slaughter. I may be wrong on that.

2. If the Nokia deal becomes uncertain, or worse, 'dead', my guess would be that ALU shares would be in for a rough time - while there are skeptics on the benefits of the deal, seems the majority of opinion was that it was quite a good idea, and that's when ALU's price took off. My guess is that if it were to fail, in the short term ALU may get quite beat up. But IIRC, you were bullish on ALU as a stand-alone company, a good while before NOK rumors and then confirmation occurred.  Wondering if I've got that right. INFN taught us that standing some immediate pain is worth the wait. Your 'buy' target was in the low 50's - in light of this wrinkle, I'd think you must hold off and see how the dust settles (article points out that ALU now trading below the 'buyout' price), before commiting more capital, perhaps.

On a different OT tangent - interesting reuters/bloomberg video in the news talking about how widespread companies using non-GAAP vs. GAAP accounting to fudge what their real profitability is, and the high employee stock compensation that doesn't get included in non-GAAP accounting. Cites MSFT, INTC, not doing this, while GOOG, Facebook, Linked in, and others obfuscate earnings in this maner. Point being that its pretty much an industry-wide practice and problem, not restricted to egregious violaters like EA.

Speaking of which, there doesn't seem to have been a lot of discussion about whether the VG sector has some investable names, outside of EA and GME. With prices seeming to fall across the board (e.g., ATVI, TTWO), are they worth a look? I've sworn off TTWO, but I'm wondering how ATVI's prospects are fairing. Or maybe we have covered it, in a sense - Jester's regular hw/sw tracking being way behind last cycle might be the commentary on that. The availability of Xbone at $350 w/the Master Chief collection included perhaps speaks to that, as well. 

 

 

 

 

First let me address my take on ALU as a standalone company:  I believe that ALU on its own would still be a nicely profitable investment, but it may have taken the full four years to see the $7 to $8 PT that I had in mind when I started to accumulate.  So I would still hold it if the deal had fallen through.

That said, there is no question that a combined NOK-ALU would be a far stronger company that either one on its own.  In other words, I like this investment far better now that NOK is involved.

On the Elliott Management involvement:  I see little to no risk with them being involved.  I doubt these folks would rock the boat to the point where NOK walks away.  They should have a decent idea regarding how far they can push NOK.  Activists are typically very smart, I am sure they have done a great deal of research/due diligence before getting involved.  In addition, they see an opportunity on potentially getting NOK to sweaten the deal given that there already is another firm that has called for a better price. 

 

In short, I am quite positive that Elliott Management has gotten involved, it gives me a great deal of comfort that others see the potential in the NOK-ALU deal. 

I have been reading a few more articles regarding Elliott Management's involvement in ALU.  The one published by The Street includes information as to how Elliott Management has been involved in several past and current acquisition deals.  Interesting.

Elliott Management like many other activists are vultures who take advantage of these situations where the deal is perceived to be benefiting the acquirer in a pronounced fashion.  I am not complaining, just calling the kettle and the pot black. 

The bottom line is that its involvement may bring something positive for ALU shareholders, and if NOK is keen on doing this deal as quickly as possible, it may just pony up a bit more money.

NOK is getting a good deal, I am of the opinion that sweetening the deal to 0.6 to 0.65 NOK shares for each ALU share may not be a stretch 

From The Street's article:

 

"Elliott is now a regular in high-profile European deals. The hedge fund is suing Kabel Deutschland Holding AG, a German cable company bought by Newbury Park, England-based Vodafone Group in October 2013 for €7.7 billion. Elliott claims Kabel's board acted improperly by agreeing to Vodafone's €84.53 per-share proposal even though its own audit said the company was worth €104 per share.

The New York investor bought 13.5% of Kabel after Vodafone began its overtures.

Elliott has made similar moves in other German deals to line its pockets. Two years ago it prevented San Francisco health care giant McKesson from buying and delisting German drug distributor Celesio AG. McKesson this year was able to buy a majority of Celesio, but only after reaching an agreement with Elliott, which remains invested.

And it's also active in Asia. The investor is suing to stop Samsung C&T's $9 billion-plus takeover by sister company Cheil Industries as well as the related sale of a 5.8% stake in construction company Samsung C&T to building materials supplierKCC. Elliott claims the deal would cost shareholders billions and is illogical."