I do not know if this is the place to this thread! So if the wise men and woman choose to move it that's okay. However, it is very important. I am researching acquisitions, hostile takeovers, and how corporations work. What is a Acquisition (Non Open Market) for zero dollar before my understanding is this is some type of stock option. Why would a bunch of executives execute this two days before releasing quarterly numbers execute this type of action?? Now if the numbers they release are going to be bad in this case cause a drop of 20% or more how would this benefit\hurt the company as a whole? Now from my research is that these shares were gained for nothing and they then can sell them on the open market a the current price. While it may not be illegal is it ethical?? Thanks
Not sure what you're asking; it may mean no net gain, or an equity swap of some kind of equal values, or merely an assumption of a company that has no net worth but a lot of debt, etc., or they simply just want to record the liability or gains on another quarter's reports. Any number of reasons. I 'acquired' my brother's company for 'zero dollars' when he was called up for active duty during the last Iraqi surge that deposed Saddam, for instance, for tax purposes there was no gain on my end or his, just an equity swap. I'm assuming in your case they mean no cash changed hands, usually, or the company being acquired had debts larger than its equity and the acquiring company paid nothing for it, or they want to charge the acquisition costs off to the next quarter's reports for some reason or other. Your question isn't all that specific. There are all kinds of zero dollar contracts and deals; the permutations are endless. http://www.businessdictionary.com/definition/zero-dollar-contract.html In many cases they're back door deals like this one: http://denverprblog.com/2008/03/10/was-ayers-pr-a-back-door-zero-dollar-acquisition/
Not sure I fully understand the OP details of the deal, but one option might be positioning themselves for a merger/takeover by the entity that received the option as opposed to risking being taken over and broken apart on the open market. For instance, you might prefer a competitor in the same business to take over your company for the seamless transition for your customers and employees as opposed to Mitt Romney coming in, firing everyone, and taking your operations overseas.
Okay the company executives executed an acquisiton ( non open market) why would they do that two days before q2 numbers were released. Also why would they do this knowing the numbers were bad. And the stock price would suffer.
I think I addressed a possible explanation, but it is unlikely that the company receiving the options would be able to turn around and sell them and not face insider trading charges, though I suppose it might depend on what the option price is in relation to the stock price before and after the earnings report. An example of how this sort of plays out would be facebook. Many of the FB folks were locked out of being able to sell their stock for quite awhile after the IPO in order to allow the market time to normalize that stock value in relation to other stocks and FB's actual post-IPO performance.
Okay i understand now the recieved the stock for zero cost. Numerous company executives exercised the options. Two days later the stock dropped 23 percent amd the monday after another 5. I was unclear on exactly what they were trying to accomplish! So they were not trying to protect the company they were trying to profit.
Unless it was publicly traded this is no big deal, and nothing particularly wrong with it; none of the shareholders were left in the dark. The 'Q2' timing could be entirely coincidental, at least I don't see the relevance as it had no effect on the value being traded that I can see; it could very well be a matter of the other participants buying the stock's quarterly schedule as a factor as well. There isn't a lot of detail in your scenario. Tax considerations are another, or wanting the deal off the books of the next quarter, i.e. merely closing out one ownership and transferring it at as a bookkeeping convenience. I seriously doubt the counter-parties were buying ownership completely in the dark about the state of the company or anything, and it may be a tax advantage to them on their books after assuming control of the company to have and debits on their books instead of on the previous owner's. In general I don't see anything crooked or devious about it based on what you've given us.
So the execs don't own all the stock? Then they would have to file 10K's or other reports to some regulatory body. Maybe they're available online. If they do own all the stock, then the market doesn't have any effect on the price. Many takeovers are rarely at market prices, especially for big shareholders. Of course, if a company throws a lot or all of their stock on the market at one time, the price will drop substantially, no matter what the company, unless it's an IPO or something. The public price is just what somebody outside will bid for it, not necessarily it's value to the principals in private deals, which can be radically higher or lower than what some outsider would bid for it.
Yeah it shows a market cap of 1.5 billion. I do not think it is worth near that much probably 40% of the market cap.
